ACCC GIVES GREEN LIGHT TO OPUS OVATO DEAL
Competition and consumer commission the ACCC will not oppose Opus Group’s proposed acquisition of Ovato’s book printing business, with the $8.5m deal for what was Griffin Press now set to go through today.
Making its decision in quickfire time, the ACCC cited concerns over Ovato’s solvency as a reason for letting the deal go ahead. ACCC Commissioner Liza Carver said, “A key factor in the ACCC’s decision was the likely imminent insolvency of Ovato if the proposed transaction did not proceed.” ACCC knocked back a similar deal a decade ago when Opus looked to buy what was PMP’s Griffin Press.
Ovato will receive $8.5m for the sale, with Opus also providing a further $2.5m in the form of a convertible note, due to mature in 18 months' time. Opus will keep the former Griffin Press site in Adelaide as is, aiming to retain all 80-90 staff, and harmonising production with its existing book manufacturing facilities at McPherson's and Ligare.
Opus owner, Hong Kong based Left Field Group, injected $10m into Ovato just two months ago, in the form of a $5.1m loan and by taking over a $4.8m chattel mortgage. Left Field now owns 14.7 per cent of Ovato. However Opus executive chairman Richard Celarc scotched reports the group was looking to take over Oavto, telling Print21, “Catalogues is not our business”.
The ACCC looked at the local book manufacturing market, where Opus’ book printing division, McPherson’s, and Ovato’s book printing business unit, Ovato Book Printing (formerly Griffin Press), overlap in the printing of mono books sold in Australia.
Commissioner Carver said, “Market feedback regarding the transaction raised two significant but competing concerns. The first was that the proposed acquisition would reduce competition by combining the two largest suppliers of printing of mono books sold in Australia.
“The second was that publishers who warned of the critical importance of maintaining book printers’ capacity in the market to meet future demand, also raised significant concerns that printing capacity would be removed from the market if Ovato’s financial position resulted in it closing down.”
The ACCC retained specialist insolvency advisers, carefully reviewed Ovato’s internal business records including recent financial results and forecasts, and conducted a number of compulsory examinations of Ovato executives to assess the likelihood of insolvency.
“Based on that evidence we concluded that without the proposed transaction, Ovato would become insolvent and there was a real chance that its printing capacity would exit the book printing market,” Carver said.
Opus’ commercial printing business, CanPrint, overlaps with Ovato’s Print Australia business in the supply of certain commercial printing services. Following the proposed transaction, the Print Australia business will continue to be operated by Ovato. The ACCC concluded that this aspect of the proposed transaction was unlikely to result in a substantial lessening of competition in the supply of commercial printing services.
The ACCC understands that, as result of the sale of Ovato’s book printing business and injection of cash via the convertible note, Ovato will be able to continue to compete in commercial printing services.
James Hannan, CEO at Ovato said, “This deal provides a refreshed debt profile and a path towards equity and investment from an experienced industry player. Further narrowing of Ovato’s focus will only strengthen our ability to continue to deliver quality and efficiency to our valued clients across our packaging, sheetfed and offset printing businesses.”
What was Griffin Press is a technologically advanced business, with a full, on-demand digital print line with an HP digital web and HP Indigo for printing the covers. It also has an advanced Kolbus case-binding line.