Ovato to split retail distribution sale in two

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Print giant Ovato’s proposed sale of its retail distribution business will be split in two, between Australia and New Zealand, to take account of longer regulatory scrutiny in the land of the long white cloud.

New CEO at Ovato: James Hannan
Steep decline in distribution volumes: James Hannan

The company is selling the former Gordon & Gotch business to its major customer, shareholder and the region’s biggest magazine publisher Are Media, with the deal set to be rubber stamped at an EGM on 16 July.

The business will now be sold to Are Media in two tranches, with Are paying $10m for the Australian business, and taking on $22.5m of the debt. Plus, Are will pay $5m for the New Zealand business, and will take on $4.5m of debt. The Australia deal is expected to go through on 31 July, with the New Zealand sale targeted for 30 August or soon afterwards.

The loan from Are Media to Ovato, currently standing at $2.3m, will be repaid once the sale goes through.

“Receiving competition clearance in New Zealand is likely to take longer than that of receiving clearance in Australia,” Ovato said. “Rather than delay the completion of the Transaction, the parties are proposing that the sale and purchase of each of Retail Distribution Australia and Retail Distribution New Zealand be completed separately.

Following the sale Ovato will close its residential distribution business altogether; 31 July will be its last day in operation. Ovato CEO James Hannan said Covid had turned retail distribution into a loss-making business, with volumes in “steep decline”.

He said redundancy and lease break costs associated with the sale and closure would be less than losses would have been had it traded on.

Are Media represents about 40 per cent of the Ovato Retail Distribution volumes.

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