The country’s two biggest printers will become one, as PMP has entered into a deal to merge with Hannan-owned IPMG.
Printing giant PMP will acquire 100 per cent of fellow printer IPMG in a move that will create a new listed printer and printing services group. In the deal IPMG owners the Hannan family will own 37 per cent of PMP, in shares valued at $119m.
PMP's shares rocketed by 33.8 per cent on news of the deal to 85c.
The deal is subject to approval from independent expert Grant Thornton, anticipated to be fully completed by January 2017. It will be subject to a vote by PMP shareholders on December 16, but that will be a shoo-in given the share price action today. It will also come under scutiny of the ACCC who knocked back a similar proposed merger 15 years ago, as between them the two businesses have a major share of the country's best selling magazines and long run catalogues, however the media landscape is dramatically different today.
The new combined entity will have a revenue of $1.28bn, with PMP’s 2015/16 income $820m and IPMG’s at $362m.
PMP chief executive Peter George says the company’s acquisition of IPMG will deliver significant cost savings that are crucial in a difficult business environment.
“PMP and IPMG have taken decisive action to bring about the proposed merger so that we can combine and adapt to the realities of Australia’s print industry in the decade ahead, in the process creating sustainability and value for our customers,” says George.
IPMG executive chairman Michael Hannan says, "This merger is an important strategic decision not only for PMP and IPMG, but importantly for all of the customers of both companies as it will drive innovation and efficiency. Customers remain at the heart of our business."
“It is the shared intention of the parties to respond to industry challenges by reducing under-utilised and older press and bindery fleet capacity.”
“It will enable us to bring the best aspects of our firms together and to more efficiently deliver world-class services and products,” adds Hannan.
PMP independent chair Matthew Bickford-Smith says the group’s directors ‘unanimously recommended’ shareholder approval of the merge. He says the challenges of a condensing print industry drove PMP and IPMG to consider the merger.
“We face significant challenges in the print industry in Australia due to changes in demand. We welcome the merger with IPMG,” says Bickford-Smith.
“IPMG is a strong fit with PMP and together we are better placed to address these industry issues and create a more efficient and sustainable PMP.”
ProPrint spoke to PMP spokesperson Rodd Pahl who says a merger between PMP and PMG is ‘not unexpected’ and says at this stage there are no plans of plant closures between the two printers.
“The merger has been under discussion for some time, and the conditions of the industry as we know it today really pushed the decision,” says Pahl.
“At this stage there are no decisions made about plant closures, and we can’t decide anything until the deal is completed in January. In the meantime it is business as usual and all formal processes will be adhered to.”
The two print giants attempted a unsuccessful merger 15 years ago. The proposed merger was scrapped in 2001 due to opposition from The Australian Competition and Consumer Commission (ACCC). IMPG and Blue Star attempted a merger in 2014 which didn’t go through.
IPMG operates several internal print businesses Hannanprint, Inprint and Offset Alpine. PMP began under Murdoch’s media empire and is now Australia’s biggest print communications company.
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