The much talked about negotiation in tatters
Brisbane, QLD -- (SBWIRE) -- 06/20/2014 -- The merger deal between Blue Star and IMPG that could have been in the tune of $800m-a-year has fallen through.
The second and third largest printers in Australia seemed to be headed in the right direction when a heads of agreement was signed on 30th March. But within a span of 72 days since, things have gone downhill and the deal has now been called off for good. There were signs that something was amiss when the talks were behind schedule and couldn’t keep up with the deadline on May 30th. Senior executives then had said that it could take about a month, but as things stand now, the merger plans are well and truly over.
According to the companies, “the benefits of merging these businesses are significant and there is a need for meaningful industry rationalisation, the due diligence process, involving more than a dozen working groups set up to examine every part of the businesses, determined the cost to rationalise the businesses and the risks associated with the implementation outweigh the expected benefits.”
Geoff Selig, Managing Director, Blue Star would rather not get into the whys and how’s behind the breakdown of talks and collapse of the deal. He acknowledges the fact that once heads of agreement is signed everyone expects the deal to go through. But according to him, it doesn’t always work out like that. He admits to being disappointed about the recent development, especially since a lot of work was put in but remains hopeful for both the companies individually in the future.
Now Blue Star has taken initiatives to consolidate its position in the industry by snapping up iGroup Australia. It also signed a heads of agreement with STI Group for its Australian business – Reg Hammond’s old company. However it doesn’t take away from the fact that a deal that could have put together a front to rival PMP has gone down and there are no real answers available at the moment.
IPMG executive chairman Michael Hannan and Mr. Selig were extremely excited when the original heads of agreement was signed and hoped it could be the catalyst for much needed industry consolidation. Mr. Hannan had in fact gone on to say that though he had seen several deals in his professional career, this was as good as it could get. Mr. Selig had agreed when he said, “You don’t get a better combination of businesses in Blue Star and IPMG. We are highly complementary companies and have a strong reputation for the way we do business.”
It was believed that the combined company would have a strong balance sheet as well as culture. Thus it would be enabled to invest in new technology, innovation and equipment to ensure that it keeps its competitive edge in the market. But things have fallen through now and the companies that are successful businesses in their own right will return to being fierce competitors in the industry.
There has been a cautious optimism in the industry in general and small printers are happy about the prospect of pursuing smaller clients. According to Look Print chief executive and PIAA president David Leach, to go after big clients one needs a lot of equipment and money, which these companies will be able to now. He also believes that the smaller market will be left to smaller printers who can service it better.
Both Blue Star and IPMG are involved in sheetfed printing and webfed printing, operating business along the East Coast. The deal falling through may have its advantages for some, but for these big players its back to competition as usual.
To know more about Inprint, visit website www.inprint.net.au
About Blue Star-IMPG Merger
The two big name printers in Australia had signed a heads of agreement and were headed towards a merger. But the talks have fallen through, setting them up as rivals once again.
Inprint Pty Ltd