Blue Star is making a big entrance into the $1.5bn promotional products market with the acquisition of Sydney-based agency Vavavoom.
The move further diversifies the reach of Australia’s biggest sheetfed printer as it transitions to a full-service marketing and communications company, and opens up a new market ripe for consolidation.
Blue Star will snap up the business lock-stock-and-barrel and allow it to run autonomously from its Botany facility under the continued leadership of its chief executive Matt Cave, with all 19 staff retained.
Vavavoom will be rebranded Blue Star Promote and become the printer’s sixth division following the recent rebrand that Blue Star an operating division of ive Group.
[Related: More mergers and acquisitions]
Blue Star chief executive Matt Aitken says promotional products is a logical addition for the company and allows it to grow its customer base and offer more services to existing clients.
“We see a merchandise and promotional products offering as being closely aligned with the diversity of the other services Blue Star can provide its clients,” he says.
“The promotional products industry in Australia continues to grow strongly and is a sector in which we see significant opportunity and potential.”
Aitken says Blue Star has long dabbled in the promotional space and outsourced production to specialist companies, but now can improve its bottom line and control quality better by bringing it in house.
“It is also a good fit with our retail display business, as we can integrate promotional products into diversified campaigns and add value for clients,” he says.
Cave says the deal stems from Vavavoom’s ambition to become the biggest player in the promotional products market and Blue Star’s significant muscle will help get it there.
“We realised there were a few big things missing from our growth plan like warehouse size, experienced leadership, and funding for acquisitions – all of which need big investments,” he says.
“So in January we began looking for like-minded companies to join with and it quickly became clear that Blue Star was the best fit and was interested in entering the market. It was a no-brainer.”
Both Matts say Blue Star and Vavavoom are a perfect culture fit, both being ambitious companies working to become market leaders and actively looking to consolidate the industry.
The pair have known each other for seven years which facilitated an easy, quick deal only taking two months to complete.
[Related: More Blue Star news]
Cave says with Blue Star’s backing there is huge potential growth for Vavavoom and he hopes together they can complete at least three acquisitions in the next two years.
“The promotional products market is fragmented with a lot of small companies and no really big players, so it is ripe for consolidation and we would like to drive it,” he says.
Aitken agrees, saying the growth and consolidation potential is one of the reasons Blue Star bought Vavavoom, which has the leadership to make it happen.
Vavavoom provides a wide range of promotional products, encompassing basically anything that can be used as a branding tool, with apparel and events two of the biggest markets.
Cave says the company targets blue chip clients, many of which are big corporates and financial services firms.
Its Botany facility has full production capacity, meaning Blue Star can let it run itself and just give it the backing it needs to grow, and small sales offices in Melbourne and Brisbane. It also has a long-standing supply chain to China where it sources from local firms.
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