PMP has been forced to delay its planned merger with IPMG by almost two months to allow the Australian Competition and Consumer Commission (ACCC) to take a closer look at the proposed deal.
“Following discussions with the ACCC, there may be a need for a short delay in completion to allow the ACCC merger review process further time to be completed,” PMP told the ASX in a statement on Monday. “PMP has undertaken not to complete the transaction before 23 February 2017 and the ACCC has indicated that it will endeavour to complete the review by this time.”
When the merger plan was announced in October, PMP said it expected the deal would be completed on 3 January, ‘subject to shareholder approval and other conditions.’
“The ACCC has requested additional time to look at the issues and it’s as simple as that,” PMP spokesperson Rodd Pahl told Print21. “The holiday period intervened and what we understand is that they haven’t yet come to a view and have asked for more time to look at the issues. It’s no more complicated than that. PMP and IPMG have acceded to that request and the reality is that we are working constructively with the ACCC.”
In an earlier call for submissions, the ACCC said its investigation of the proposed merger would be focused on the impact of competition:
In particular, we are seeking your views on: whether printing prices will increase; how closely other suppliers of other printing services compete with PMP and IPMG; whether suppliers of catalogue and magazine printing services must use particular types of printing methods (for example, heat set web offset printing) to produce printed materials suitable for their customers’ needs; the extent to which suppliers of other printing services (for example, newspaper publishers) could competitively print catalogues and magazines; and the likelihood of new entry or expansion into the supply of catalogue and magazine printing services in Australia.
At Friday’s extraordinary general meeting, PMP shareholders voted overwhelmingly to approve the merger, with 99 percent in favour of the deal.
Before the vote, PMP chairman Matthew Bickford-Smith told shareholders:
The board believes that market overcapacity makes this merger an important and necessary strategic response to sustain PMP’s future. It will enable us to extract the synergies required to remain competitive with this market. IPMG is a strong fit for PMP. It has similar, customer-focused values and commercial approach. Together we are better placed to adapt to the realities of the Australian print industry in the decade ahead.
In the short term, the merger will deliver significant synergy benefits by retiring older equipment – in the process, and very importantly, removing some spare capacity out of our business. The Board expects the merger to deliver $40 million in annualised cost savings – for a one-off cash cost of $65 million – enabling payback in 12-24 months.
According to the ACCC website, the commission plans to make an announcement on Thursday regarding its review of the proposal: 22nd December 2016 - Provisional date for announcement of ACCC's findings (as outlined in the Informal Merger Review Process Guidelines, this may be a final decision or release of a Statement of Issues).