Lights, camera, consolidation




Remember Part 1? It opened around a decade ago, as acquisitive companies backed by cashed-up private equity firms hoovered up medium-sized printers. According to the script, combined entities such as Blue Star and Geon would have the size to win the largest contracts and the economies of scale to produce at the lowest price. 

That was how the storyline was originally conceived, but it would play out far differently. The GFC turned it into a horror film. Companies that had been bought at the height of the market swiftly became overvalued. They were bought too high and failed to deliver. Now acquisitive parties are lining up to buy at the bottom. 

As ProPrint went to press, we heard the news of a mystery bidder making a play for Salmat’s mail business. The $300 million operation was the most profitable division in its first-half results. While the value of the bid hasn’t been revealed, Salmat has called the buyer “credible”. 

That might not have been the first word PMP’s board used to describe a takeover bid for that company. At 68-78c per share, the price could be just four times EBIT, which seems a steal for the country’s biggest print group.

When the approach was announced, it was clearly the first chapter of what could be a huge story arc. Then came the unexpected twist – the interested party was none other than TMA Group, which only turned over $70 million in its last full year before delisting from the ASX. In the same period, PMP generated just shy of $1.2 billion.

The Kiwis had a starring role in the last era of consolidation and they won’t be left out in this new period of bargain basement M&A. New Zealand group Kalamazoo has quietly been picking up distressed companies for the past few years and is soon to reach $150 million.

Ambitious CEO Steve D’Souza isn’t stopping there; he aims to reach $1 billion in the next five years. D’Souza provided the quote of the month when he told us that he believes in recessions, but chooses not to participate in them. Some might call it the stuff of fairy tales. Sounds to me like a Hollywood ending.

Steven Kiernan is editor of ProPrint

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