PMP to merge with IPMG

ASX-listed print giant PMP has entered into an agreement to merge with privately owned IPMG. PMP and IPMG are the two biggest printers in the country, the new entity will be a $1.28bn business.

When the deal goes through PMP will acquire 100 per cent of IPMG, while IPMG owners the Hannan family will have a 37 per cent shareholding in PMP, valued at $119m.

PMP's share price has rocketed by 34 per cent following the news.

PMP has flagged significant challenges within Australia’s print industry as the cause of the consolidation.  

PMP CEO Peter George comments, “As we make decisions in the year ahead to deliver the integration and anticipated cost savings, we will work closely with our employees and their union to achieve the best possible outcomes for our customers, employees and shareholders.

“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 and shareholders.”

PMP spokesperson Rodd Pahl tells Australian Printer, “It is really changed industry conditions causing the whole industry to be stressed, and consolidation has been talked about for a long time, so that is really the driving force.”

IPMG is entitled to nominate two directors to the PMP board and the transaction is subject to approval at a meeting of PMP shareholders scheduled for December 16.

Pahl says no decisions have been made in relation to the outcome of the various plants owned by PMP and IPMG and the staff of both companies.

He adds, “Essentially it is business as usual until the merger is complete and this is not due before January next year.”

However IPMG executive chairman Michael Hannan has revealed the new entity will retire its older press and bindery fleet.

“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 to more efficiently deliver world-class services and products,” he says.

“The 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.” 

The merger is expected to deliver approximately $40m per annum of pro-forma cost synergies across the combined group with one-off cash costs totalling approximately $65m. 

IPMG is a long established print and digital services provider operating in Australia through its various businesses, including Hannanprint, Inprint and Offset Alpine. 

The company generated revenue of $362m and $21m of normalised EBITDA for the 12 months ended June 30 2016. PMP revenue was $820m with EBITDA of $51m.

In March 2014, IPMG attempted to merge with its rival Blue Star, however the deal was called off just 72 days later. PMP and IPMG have previously attempted to merge, 15 years ago, but the ACCC called the deal off.

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