ACCC to review IPMG-PMP merger (updated)

Oct 27, 2016 at 08:41 pm by Staff


Fifteen years after abandoning a similar merger, Australian heatset printer PMP has bought rival and digital services provider IPMG Group, which will become a 37 per cent shareholder.

Instead of fighting for magazine and catalogue printing contracts, PMP expects to deliver about $40m a year in savings through group synergies following the $119 million merger acquisition.

Shareholders in IPMG - which is controlled by the Hannan family - will get shares equivalent to "up to 37 per cent" of the expanded company, which is expected to have earnings (EBITA) of $112.2 million including savings and $40 million already expected profits. One-off cash costs of the deal are expected to total $65 million.

Following PMP's re-equipment programme over the last decade and IPMG's recent move and equipment upgrade at Warwick Farm in Sydney's southwest, future capital expenditure commitments are expected to remain low, especially as changes in demand for print present the industry with significant challenges.

PMP - which has a $202 million market capitalisation - is suspending dividends and share buybacks during implementation period, and doesn't expect to resume them before 2018. Its biggest shareholders are said to include Allan Gray and Lazard Asset Management.

The deal is subject to approval by independent expert Grant Thornton in a review due to be completed by January.

IPMG - which claims to be the largest independent marketing group in the southern hemisphere and operates printing businesses Hannanprint, Inprint and Offset Alpine - has origins which go back to 1887, when ambitious Irish immigrant Francis Hannan opened a butcher's shop in suburban Randwick, and then started printing its fliers and advertising. An early photograph (from the IPMG website) shows the commercial printing business adding newspaper typesetting to its offering.

The two heatset printing giants tried to merge in 2001, eventually abandoning the idea after attempts to satisfy regulator the ACCC that it would not substantially reduce competition.

• A new review by the ACCC was listed on November 2 and sets November 18 as the closing date for submissions from interested parties. December 22 has been set as the provisional date for announcement of the ACCC's findings as a final decision or release of a Statement of Issues.

Sections: Print business

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