The Australian Competition and Consumer Commission (ACCC) has approved IVE Group’s proposed $16 million acquisition of parts of troubled catalogue and magazine printer, Ovato.

The approval comes after IVE Group entered an agreement to acquire substantially all of the assets of troubled printer, Ovato, for a net purchase consideration of approximately $16 million.

Ovato was placed in voluntary administration on July 21.

This agreement was subject to ACCC approval, and that has been received today.

“Despite the proposed acquisition combining the two largest providers of heatset web-offset printing in Australia, we reached the view that IVE was the only viable purchaser of Ovato, and that if this acquisition did not go ahead, the administrators would have to liquidate Ovato’s assets,” ACCC Deputy Chair Mick Keogh.

“While in some cases the liquidation of assets can result in a more competitive outcome than a sale to a competitor, for example if those assets are purchased by potential competitors, in this case we concluded that Ovato’s printing assets would be sold to overseas purchasers or sold for scrap. The ACCC considered there was not a real chance the heatset web offset printing assets would continue to be operated by any other firm.

“The feedback we received from several customers was that while they were concerned that IVE would be their only option, they were more concerned with the impact on printing capacity if Ovato’s assets were liquidated.

“Asset or business sales by administrators are subject to the same substantial lessening of competition test as any other transaction. As there was no real chance that Ovato or its assets would continue operating in the market without the proposed acquisition, we consider the proposed acquisition is unlikely to substantially lessen competition.”

This ruling now allows IVE Group to acquire Ovato’s print site at Warwick Farm in Sydney and Bibra Lakes in Western Australia.

The Queensland print site at Geebung will be closed.

IVE Group CEO Matt Aitken told Sprinter that the supersite at Warwick Farm, which features seven heatset web presses, will run for the next 18 to 24 months as IVE Group assesses the business and commences the movement of machinery to the company’s sites at Huntingwood and Silverwater.

Aitken has spent the last two days discussing the changes with Ovato staff with his briefings timed to ensure all staff on all shifts heard the news direct.

“The majority of the staff of the sites we are acquiring will be retained,” Aitken said.

The purchase does not include Ovato’s New Zealand businesses, nor its packaging business in Brisbane or its printing operation in Cairns.

IVE Group have openly discussed plans to move into packaging as a strategic move in the coming 12 months but Aitken said the Brisbane packaging operation of Ovato’s was small and not what IVE is looking for.

The current annual revenues of Ovato’s Australian web offset printing operations are estimated to be around $160 million.

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