Newspaper article The Canadian Press

Transcontinental Ready for Large Packaging Acquisition to Transform Company

Newspaper article The Canadian Press

Transcontinental Ready for Large Packaging Acquisition to Transform Company

Article excerpt

Transcontinental ready to buy packaging firms

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MONTREAL - Transcontinental Inc. is ready to spend more than $1 billion to purchase packaging companies that would diminish the role of commercial printing that has been the cornerstone of the company since its founding 40 years ago.

"I think in 2018 we will have opportunities to deploy capital in acquisitions, a lot more than in 2017," CEO Francois Olivier said following the company's annual meeting.

With no debt, he said Canada's largest commercial printer has the financial flexibility to make a large transformational deal that would allow flexible packaging revenues to surpass printing for the first time.

It can purchase a company that generates up to $1 billion of annual revenue and $150 million in EBITDA (earnings before interest, taxes, depreciation and amortization,) he said.

"It's obvious that we have the means to make large acquisitions," Olivier told reporters.

Transcontinental entered the packaging industry four years ago as part of its efforts to become less reliant on newspapers and magazines that are being hammered by lower advertising revenue as readers move to digital platforms.

Olivier said its targets are mainly located in the United States where the large population provides demand for food and pharmaceuticals that are the biggest users of packaging.

Transcontinental is in the process of selling its remaining regional general newspapers, which could be completed in a couple of months.

That will leave its media business with educational book publishing, business and specialty publications that are not reliant on advertising and are poised for growth.

Media is expected to account for five per cent of Transcontinental revenues in 2018, down 29 per cent in 2014.

Even though it is getting out of the general news business, Olivier criticized the federal government's budget proposal as "missed opportunity."

Ottawa plans to provide $50 million over five years to support "local journalism" in under-served communities and explore new models to support "non-profit" journalism. …

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