$7.5 million takeover of Pongrass by Penfold Buscombe

The total purchase price includes the assumption of $4.8 million in finance lease obligations, notably for the only Heidelberg 12-colour long perfecting press in Australia, which will be integrated into Penfold Buscombe’s East Botany plant at the earliest opportunity. Scott Telfer, general manager of Pongrass Communications Group (PCG), will take up the role of national sales and marketing manager with Penfold Buscombe.

In a statement issued to the stock exchange Penfold Buscombe said it expects to gain additional sales of at least $16 million per annum from the takeover. The company is paying $1.5 million for goodwill, of which $0.5 million is payable six months after completion. According to industry analysts this 10 percent of turnover for goodwill is in line with industry standards. PCG had a customer base heavily weighted towards contracted major corporates such as Westpac (via a consortium) and Toyota.

The takeover of such a high profile company for little or no commercial premium serves to illustrate the difficult situation for mid-sized commercial printers in a market coming under increasing pressure. According to Alistair Hill such consolidation is good news for the industry. “It is becoming very hard for mid-tier printers to operate in the current environment,” he said. “I think Tom Pongrass recognized this and made his decision to exit the industry.”

It is expected that Penfold Buscombe will offer employment to around 55 of PCG’s 136 staff. Other staff will be offered alternative employment or be made redundant by PCG.

PCG traded as Websdale Printing, Potstill Press and Pongrass Digital. In line with company strategy all businesses will be integrated into the premium national brand of Penfold Buscombe. Digital will continue to operate from its existing premises at Waterloo in Sydney.

"This acquisition builds on the scale and efficiency of the East Botany plant and integrates with our operations in Victoria and Queensland, further enhancing our ability to provide customers with complete end to end print communications solutions. Our new digital printing capability will broaden our service offering and complements our leading position in innovative direct mail solutions," said Hill.

“When we established the East Botany site in January 2203, we specifically planned for expansion of the business, including growth through acquisition. The addition of the 12-colour press is a move which addresses an important capital expenditure requirement of the company going forward,” he said.

“Penfold Buscombe has a history of having integrated successfully 10 brands over the past eight years. The integration of acquisitions is a core competency of the group and we are confident of a smooth transition with respect to PCG.”