Blue Star in the ring with CHAMP private equity

In a statement to the NZ stock exchange, Blue Star Print Group (BSPG) said it was in advanced discussions with CHAMP Private Equity in relation to the sale of all of its ordinary shares. 'It is expected that these discussions will result in a formal sale and purchase agreement being executed between the parties shortly.'

At this stage the existing senior management team, including executive chairman Tom Sturgess, will continue to be shareholders and employees of the company. The deal will see a whole swag of NZ and Australian printing companies – 15 distinct enterprises under the banners of Webstar, BSP NZ & BSP Australia – change hands. Companies include such commercial sheetfed printers as Wellington-based Format, Auckland-based Nicholson Print, Melbourne-based Craftsman and Sydney-based Link Printing.

BSPG revenue is split almost 50/50 between its New Zealand and Australian companies. Last year it turned over NZ$ $394.5 million for EBIT profit of $49.3 million. The rumoured price will represent a very nice earner for the management buyout team led by Sturgess, which bought the company in 2001 for $165 million

A surge of private dosh into printing

If the deal goes ahead it will be the first of a number of potential PE cash injections into regional printing companies that is likely to radically transform the ownership dynamics of the industry. PE is recognised as almost always seeking an exit strategy from its targets after a short while, often after spinning off non-core businesses. Its arrival in the printing industry will guarantee interesting times ahead.

Among those dealing with PE approaches;

• Promentum, Australia's largest sheetfed printer, is currently undergoing due diligence from both private equity and industry players. A relatively reluctant PE target, it has its own growth strategy following a comprehensive strategic review finalised in June. It has called for formal offers by next Monday December 18.
  Promentum under scrutiny
  
  
• PMP, the regions largest web printer, is also in confidential talks with PE.
  PMP responds to speculation
  The stock market has boosted PMP shares to $1.93 on the likelihood of a deal taking place sooner rather than later, prompting the ASX is ask if there was anything it should know.
  In its reply PMP, said the discussions with private equity remain preliminary, incomplete, conditional and confidential. It does not anticipate any proposal before well into the first quarter 2007 and warns that one may not come at all.
  
  
• The other high profile PE deal is with a major privately owned Sydney-based printer. Proposals in response to an information memorandum are due to be finalised this week. There is the prospect of an announcement on Monday.

With so much hungry money around anything is likely to happen. PMP is the major shareholder in Promentum, so further consolidation of the market cannot be ruled out.