Japanese owned paper supplier, Spicers Ltd, has been given the all clear to acquire Australian family owned paper supplier, Direct Paper, with the competition watchdog ruling there are enough other suppliers in the market to constrain pricing.
Spicers Australia, owned by Kokusai Pulp & Paper Co. Ltd, (KPP), announced in November 2019 that it was interested in acquiring Direct Paper, which was created by the O’Neill family 23 years ago. Both Direct Paper and Spicers predominately supply commercial print businesses in Sydney, Melbourne and Brisbane.
Spicers Ltd CEO David Martin (pictured) welcomed the ACCC approval which now clears the way for the acquisition to settle on February 28 with the combined entity to begin to trade together on March 2.
“We are all very happy. We complement what each other does and pulling these two teams together I think we have a really strong team with fantastic people,” Martin told Sprinter.
The purchase has added new dimensions to Spicers offering with packaging board supply being one of the key reasons it targeted Direct Paper last year.
“It means we are now stronger in packaging then we were yesterday so that’s one of the key areas for us to focus on. It also gives us a chance to operate more with commercial print as well. Our businesses have products that the other didn’t so basically this completes our portfolio on the paper side quite nicely,” Martin said.
Martin confirmed Direct Paper will continue to trade under its current name promising a seamless transition for current customers, who will now have access to a broader range of products with more details to come from Spicers on this before March 2.
When Spicers’ proposal was first announced Direct Paper sales director Dale O’Neill, said the proposed sale was a “logical step” for Direct Paper and its 60 staff. Dale O’Neill and his brother Todd O’Neill, who has served as managing director of the company, will take senior roles within Spicers.
ACCC Commissioner Stephen Ridgeway said the proposal was not opposed as the commission found there were alternative suppliers of commercial printing paper and direct supply arrangements between printers and paper mills that “will continue to provide strong competition and constrain paper prices”.
“We have looked very closely at this proposed transaction, because it combines two of the larger paper merchants in these cities. However, we decided not to oppose this deal because we considered that rival merchants will continue to provide strong competition. Smaller customers generally have several alternative sources of supply, and larger customers can also import paper directly from paper mills,” ACCC Commissioner Stephen Ridgeway said.
“We found that many printers in Sydney and Melbourne were comfortable with alternative suppliers, such as Ball & Doggett, Domain and Vital.
“In Brisbane, where there are fewer competitors, we found that others are likely to expand or enter the market post-acquisition if prices rise, as barriers to expansion in Brisbane are unlikely to be significant. Direct Paper itself expanded into Brisbane in 2017.”
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