CPI goes red in mega paper merger

Major movements in the paper industry as CPI purchases the Australian operations of The Red Paper Group while paper merchant BJ Ball Papers acquires CPI's NZ operations.

The Australian acquisition will see the emergence of a new group focussed on the graphic arts, packaging and stationery industries and is expected to be complete by the end of the month. "Combining the two groups in Australia will create a strong, customer-focussed and profitable business group with turnover in excess of over half a billion," said Gerry Van Wyngen, chairman of CPI.

"This will provide certainty surrounding the future ownership of The Red Group and will enable the CPI, Edwards Dunlop and Raleigh brands to grow to become increasingly strong and robust forces in the Australian paper market."

According to Bernard Cassell, managing director of CPI group, conditions specific to the industry prompted the acquisition. "External factors have adversely impacted the group," he said.

"The acquisition gives us the opportunity to overcome some of these by growing value-added areas whilst eliminating low value-add processes that are currently duplicated across Red and CPI."

Robert Eastment of Industry Edge believes that the acquisition will have a positive effect for the two companies. "While the restructuring of the two groups will reduce the number of large merchants from three to two, it is unlikely to have any impact on low paper prices," he said.

"However, savings will be made as synergies are found, and this is likely to be the major area of better returns for the immediate future."

In New Zealand, Andrew Bull, CEO of BJ Ball Papers said that the merging of the company with former CPI businesses would create a strengthened new group committed to the New Zealand printing industry.

"This is an acquisition that will benefit all stakeholders," Bull said. "It will provide the printing industry in this country with a significantly strengthened product offering and generate further opportunities for our suppliers to access the market here."

CPI and Red have formed a formal trans-Tasman alliance under which the two groups will establish management structures and processes to enable them to work together to supply the evolving needs of the Australasian market.

CPI has also purchased a Right of First Refusal over the combined Red NZ businesses. Both companies said that regardless of the two deals, it would still be "business as usual" for staff and customers.