Pacific Print Group wins $127 million battle for Promentum

Gresham-funded Pacific Print has signed a deal to pay $2.25 per share for Australia’s largest sheetfed printing company in the face of two rival bids – one from CHAMP-backed Blue Star. If successful – in the absence of a better offer – the takeover will make Pacific Print the largest sheetfed printing company in the region.

Promentum’s board has given the plan unanimous backing, despite being engaged until recently in its own expansive power play to take over other players, notably of McMillan Printing. The bidding duel between the two PE funds drove the share price of Promentum up to the point where the directors had little choice other than to recommend the bid. The $2.25 per share is a premium of 74 per cent on the weighted share price before its recent take-over announcement boost.

Pacific Print already operates ten printing companies on both sides of the Tasman with an annual turnover of AUD$170 million. Founded in 2002 by entrepreneur, Geoff Wilding, it is 50 per cent owned by Gresham PE and employs over 700 staff. It has grown by a policy of acquisition and first crossed the Tasman in 2005.

Promentum, with AUD$172 million turnover, is the culmination of a decade long, management-driven acquisition policy. It has well-equipped major printing sites in NSW, Victoria and Queensland. A publicly listed company, it was always going to be vulnerable to PE bidding. If the takeover is successful Promentum will be delisted, although the entire group may be taken public after a period of rationalisation. Promentum faces a break fee of $1.27 million if any of its directors fails to support the bid to shareholders or goes public with criticisms.

The current drive by private equity into the printing industry is unlikely to be over as both major players scout around for suitable printing companies to boost their market share. Such companies as PMP and McMillan Printing are in discussions with PE players. Either or both would represent a major acquisition and deliver a significant market advantage to the successful bidder. PMP is the largest stakeholder in Promentum with 25 per cent, which it acquired in exchange for its sheetfed printing business.

At the same time the emergence of these giant commercial printing companies is likely to fuel the exit from the industry of small to medium operators who don’t have the profile of late model automated equipment and sufficient turnover to attract a takeover bid. The consolidation of printing capacity and breadth of service will prove very difficult for smaller companies to compete with.