IVE Group Ltd has made public its plan to acquire “all or substantially all” of troubled catalogue printer, Ovato, with the consumer watchdog now considering the potential deal and calling for submissions from interested parties by August 17.

IVE Group announced its interest in acquiring all or substantially all, or a material part or parts of, Ovato and its subsidiaries in a statement to the ASX on Wednesday August 10 and by day’s end the Australian Competition and Consumer Commission (ACCC) confirmed its consideration of the potential deal was underway.

“Given Ovato is in administration, the ACCC is undertaking its investigation on a truncated basis, and is seeking submissions by 17 August 2022. Please send comments to mergers@accc.gov.au with the title “Submission re: IVE/Ovato – attention Olivia King / Stella Leung” or call Olivia King on (03) 9290 1498 to set up a phone discussion. The ACCC will publish a provisional decision date on its mergers register in due course, however, industry participants should expect the timeline to be significantly shorter than typical ACCC informal merger reviews,” the ACCC said on its website.

Further information from the ACCC about the investigation can be found here.

IVE Group is Australia’s largest player in the heatset catalogue and magazine printing space and has confirmed it has entered into an Implementation Deed with Ovato’s administrators, FTI Consulting.

IVE Group CEO Matt Aitken said IVE is still completing its due diligence on acquiring whole or part of Ovato and its subsidiaries but needed to make public its plan so the ACCC could commence its own public review process.

“This is essentially about keeping people in the industry and keeping customers in the channel,” Aitken told Sprinter.

“So, we are really wanting to make sure, as an industry, that we are keeping strong levels of engagement with the customers and the industry.”

Aitken expects it could take the ACCC between two and four weeks to make a decision on whether the acquisition can take place.

“The ACCC appreciates that time is of the essence because the Ovato business is in administration and customers and staff need some certainty and clarity about what is happening,” Aitken said.

Should the ACCC approve this deal and it passes requisite due diligence from IVE, Ovato would come under the ownership of IVE Group further consolidating its position as Australia’s largest commercial printer.

In a statement to the ASX about the Implementation Deed, IVE Group executive chairman Geoff Selig said both IVE Group and the Ovato administrators have agreed to “progress good faith negotiations for signing of an asset sale agreement pursuant to which IVE would acquire all or substantially all, or a material part of parts of, the business or assets of Ovato and its subsidiaries”.

While ultimately it is a matter for determination by the ACCC to grant clearance, and noting that there can be no assurance that clearance will be granted, IVE’s view is that there are strong arguments to support competition clearance for the Proposed Transaction,” Selig said in the statement.

“IVE understands that the ACCC will shortly commence market enquiries in respect of the Proposed Transaction.”

Ovato’s troubled times

After a number of tough years which included a complex restructure and recapitalisation plan that involved closing down the Melbourne factory at Clayton and making 300 roles redundant in early 2020, Ovato was put into voluntary administration last month with FTI Consulting’s Chris Hill, Ross Blakeley and Ben Campbell appointed.

When the business was put into administration, the directors of Ovato said the decision was due to ongoing volatile market conditions, the increased cost of raw materials and legacy cost issues.

Ovato is the result of a merger between the historic Hannan family business, IPMG, and former Murdoch-owned PMP in 2017.

In December 2019, Ovato unveiled its revamped supersite at Warwick Farm in NSW but by the end of 2020 it had announced controversial plans to restructure and recapitalise the business. This involved closing down the Victorian plant at Clayton and making 300 jobs redundant. Creditors also received 50 cents for each dollar owed in this arrangement.

In July 2021, Ovato’s creative marketing businesses were sold to the Hannan family business, Ballygriffin Holdings, for $9 million and the A/NZ retail distribution sections of the business were sold to shareholder and major customer, the magazine publisher, Are Media for $15 million. The residential distribution business was also closed down.

The next major sale was the book printing division, the former Griffin Press, to Hong-Kong owned Opus Group for $8.5 million in June 2022, which the ACCC quickly approved citing issues. All staff and operations of that business unit are now working under Opus Group.

Ovato currently operates a supersite at Warwick Farm, NSW, with seven heatset web presses, with heatset operations also running in Brisbane and Perth. It has commercial print functionality in Cairns and Auckland, while there is also a packaging business running in Brisbane.

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