According to the Australian Financial Review speculation from the banking community would have it that Blue Star’s bid is not an if but a when, with the debate within Blue Star’s backers Champ private equity over whether the group should move soon, or wait in the hope that Geon falls over, when it will be able to pick up the pieces for a much lower price.
Geon CEO Graham Morgan was interstate and unavailable for comment as i-grafix was published, although he would likely give short shrift to such a proposition. However there is no doubt that Geon has been through a troubled period, and its private equity backers Gresham may view an offer as the best way to draw a line under its foray into print.
Both Blue Star and Geon emerged five years ago as the vehicles for the private equity cash that poured into the print industry, and both have struggled since the onset of the GFC, although Blue Star is believed to have chartered the waters far better thanks to its heatset division Webstar, which industry insiders suggest has kept the company going in recent times.
Geon by contrast is the country’s biggest sheetfed printer, and has no web operations. It lost a whopping $204m in 2009, and has been running with a $325m debt load, part of which Gresham recently ceded to its ultimate parent, the Royal Bank of Scotland (aka the British Government) in exchange for part of any future sale of the business.
Gresham’s original business model for Geon of buying various B1 print and mail houses, streamlining them, with the aim of floating and recouping their outlay plus some was scuppered by the GFC and the subsequent mass withdrawal of money from the market.
Between them Blue Star and Geon produce about $800m worth of print a year, which is ahead of the current number two company Michael Hannan’s IPMG, and some way behind the big daddy PMP, with revenues of around $1.1bn.
Comment below to have your say on this story.
If you have a news story or tip-off, get in touch at editorial@sprinter.com.au.
Sign up to the Sprinter newsletter