ASX-listed diversified print and marketing communications business IVE Group has announced it will acquire Melbourne-based catalogue printers Franklin Web and AIW Printing for $116 million.
IVE said in a statement to shareholders that the acquisitions consolidate its position as Australia’s leading vertically integrated marketing and print communications company, and is based on strong strategic and financial rationale.
“The move into large format web offset (LFWO) catalogue production is a logical and attractive extension for IVE as it continues to broaden its product and service offering, further enhancing its already powerful value proposition to the retail sector,” the statement said.
Founded in 1936 and 2001 respectively, Franklin Web and AIW Printing are considered to be among the leading players in the LFWO sector.
The acquisition will see AIW’s operations at Springvale in Victoria be fully integrated into Franklin’s operations at Sunshine in Victoria, while IVE’s Blue Star DISPLAY business in Victoria will also be integrated with Franklin’s retail display business.
Franklin CEO and owner Phil Taylor has been appointed to lead the combined Franklin operation at Sunshine.
IVE is also expected to invest $18 million for the relocation of equipment and establishment of a catalogue production capability in its Blue Star WEB facility in Sydney and the expansion of its Blue star DISPLAY capability in Victoria.
The acquisitions will be funded by a mix of equity and debt, and are expected to be completed on 13 December 2016. The integration of IVE’s new businesses are set to be completed within 12 months.
IVE’s overall pro-forma revenue and expenses before interest, taxes, depreciation and amortisation for the 2016 fiscal year will be approximately $610 million and $73.7 million respectively once the acquisitions have been completed.
IVE Group executive chairman Geoff Selig said the company’s decision last year to list on the ASX has provided a foundation to pursue meaningful opportunities for its ongoing evolution and diversification, and has continued to grow value for shareholders.
“Like our own family printing business that was founded in 1921, Franklin is a third-generation business founded by Len Taylor in 1936,” Selig said.
“I have known and highly respected Phil Taylor for many years, and strongly believe the coming together of the collective experience, passion and unparalleled capabilities of IVE, Franklin and AIW positions us incredibly well in the market to ensure our customers benefit from access to a unique global offering.”
Taylor said that while it was a highly emotional decision to sell the family business, he feels very comfortable that the shared values and business philosophy of IVE and Franklin will ensure we continue to build on Franklin’s success moving forward.
“I very much look forward to being an integral part of the broader team as we execute on our vision for the business over the years ahead,” he said.
“I have no doubt that our dedicated staff, our suppliers and our customers will benefit greatly from the expanded product and service offering. I will also be pleased at the completion of this transaction to be a significant shareholder in the IVE Group.”
AIW chairman Charles Garrard said industry consolidation in the LFWO sector is long overdue because of the excess capacity.
“Despite strong support from our customers and dedicated staff, for which we are extremely grateful, AIW is not immune to the effects of this overcapacity,” he said.