CCL Industries Breaks the Rules – January 2022 M&A Activity

It is somewhat axiomatic that a large company needs to complete bigger and bigger transactions in order to move the needle on its own revenues and bottom-line profits. CCL Industries, the Canadian company primarily engaged in label printing and related specialties, consistently breaks that rule. Time and time again, CCL finds niche players in small corners of the market and applies its characteristic discipline to the valuation of the target acquisitions.

Executing a Strategy of Acquiring Niche Players

CCL announced three transactions in January, a continuation of the string of deals completed over the past two years in which the average revenue of the acquired companies was only $18.7 million.* In contrast, CCL’s revenue, inclusive of its four primary business segments, is approximately $4.4 billion, 235 times larger than the average of the acquired companies. Each acquisition, on average, represents a minuscule 0.43% increase in top line revenues for CCL. With very few exceptions, it is rare for the delta in size between buyer and seller to be so disparate. On the infrequent occasion when we see such a difference in the printing, packaging, and graphics industries, it is usually a one-off aberration that has a clearly defined and articulated strategic logic. However, in the case of CCL, the contrast in size is the norm.