IVE Group is set to acquire Salmat’s Australian and New Zealand catalogue distribution business for $25 million, marking what it says is the final stage of its strategic roadmap.
The $25 million bid by the publicly listed IVE (ASX: IGL) for Salmat Marketing Solutions and Reach Media NZ Limited, owned by Salmat Limited (SML), is set to be finalised by January 1, 2020.
The announcement comes after IVE Group delivered a strong full year result in September with executive chairman Geoff Selig saying despite economic headwinds the health in the balance sheet may well set the path for further acquisitions.
IVE Group chief executive officer Matt Aitken says the acquisition completes the final phase of IVE’s strategic roadmap over recent years.
The deal also includes the acquisition of Reach Media NZ Limited, Salmat’s catalogue distribution business in New Zealand. Both businesses will operate as part of IVE’s production and distribution offering and will continue to be standalone businesses.
IVE Group has long utilised Salmat’s distribution service but this deal means it will now own its own means of distribution.
In addition, $25 to $30 million will be spent on a capital investment program with the acquisitions expected to be finalised by January 1, 2020.
IVE says the acquisition will bring first to market technology and sustainability to the catalogue collation process prior to letter box delivery for the existing 12,000 strong national walker network in Australia.
“These acquisitions complete the final phase of our strategic roadmap over recent years to further expand and strengthen our offer to the retail sector,” Aitken said.
“The combination of Australia’s largest letterbox distribution business with IVE’s broader print, data analytics and marketing services offer provides an exciting opportunity for our clients to enhance returns on their marketing spend through our highly integrated offer.
“Importantly, the significant capital expenditure program over the next 18 months to automate catalogue collation will support the ongoing sustainability of the national walker network resulting in a strong distribution channel delivering improved ROI for IVE’s retail clients.”
Salmat Marketing Solutions has operated for nearly 40 years providing services connecting clients with their customers. It offers a combination of targeted letterbox and online catalogues which enable clients to reach consumers and turn them into customers. Salmat’s Marketing Solutions business incorporates Australia’s leading catalogue distribution network, reaching up to 17 million Australians in seven million homes each week.
It also includes the Lasoo online catalogue site which extends the reach of the printed catalogue and takes shoppers right to the checkout. Sophisticated data and analytics helps to inform highly targeted marketing.
IVE Group has made significant acquisitions since listing on the Australian Securities Exchange in 2015, including the acquisition of Franklin WEB, AIW and SEMA.
Its full year 2019 financials showed revenue was up 4.1 per cent to $724.2 million and proforma EBITDA up 9.8 per cent to $80.4 million despite a soft second half and margin pressure from increased global paper and pulp pricing.
Proforma NPATA was also up 4.4 per cent to $37.5 million with shareholders to receive a final dividend of 7.7 cents per share taking the fully franked dividend for the full year to 16.3 cents, up 5.2 per cent.
“We’ve completed two capital raises since we listed, and whilst we deployed those funds the right way, our investors at the moment don’t really want us to undertake another capital raise,” Selig said at the time of the results being posted.
“We are in a good position to explore acquisitions and there are still some good opportunities out there, notwithstanding we made a decision 18 months ago to hold back for a while.”
The group also announced a brand streamlining strategy involving ceasing to operate under its four divisional brands, Kalido, Blue Star, Pareto and IVEO, from November 2019 and instead go to market under the IVE Group name from November 2019.
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