IVE TO BUY OVATO FOR $16M, WARWICK FARM WILL CLOSE IN 18 MONTHS

BREAKING: IVE will spend $16m to acquire substantially all of the assets of stricken rival Ovato, but will keep only the WA site operational in the long term. The deal is subject to ACCC clearance, with a decision expected in two weeks’ time. 

Under the agreement reached between IVE and the Ovato administrators to acquire the heatset business, only the Ovato WA site in Bibra Lake will stay operational.

The seven-web supersite in Warwick Farm, NSW, will operate for around 18 months, enabling IVE to transition the work produced there to its plants in Sydney and Melbourne.

IVE is not acquiring the Ovato plant in Geebung, Qld, which is now expected to close when the acquisition goes through. Neither of the two Ovato sheetfed plants, located in Cairns and Auckland, are part of the IVE deal.

Matt Aitken, CEO of IVE told Print21, “It is pleasing to reach an agreement. We will be able to maintain continuity of supply to customers, with a healthy channel for catalogues and magazines.”

IVE is spending the next 24 hours briefing Ovato staff on their futures.

The agreement is subject to ACCC clearance and the satisfaction of customary conditions. It is expected that the acquisition will be complete within two weeks should ACCC clearance be obtained.

Current annual revenues of the Ovato Australia web offset printing operations are estimated to be around $160m. IVE says the acquisition is expected to be accretive in the current financial year. IVE will fund the acquisition from its $67m cash reserve.

The deal, if okayed by the ACCC, marks the end of a 30-year story for Ovato, originally spun out of Rupert Murdoch’s empire as PMP when he was desperate for cash, and sees the vision of the seven-web supersite in Warwick Farm, opened to great fanfare just three years ago, turn to dust.

It also marks the final chapter in the 90-year story of the Hannan family’s involvement in print, which saw them develop a powerhouse printing group with both sheetfed and heatset print business. Its merger as IPMG with PMP, however, spelt disaster, with the share price plummeting, $430m worth of losses over the five years, and now seeing the administrators sell the once mighty business to its biggest rival, and for less than the price of one of the Warwick Farm presses.

Australia’s heatset print sector will be largely owned by IVE following the deal. Both major heatset product lines – magazines and catalogues – have been in decline, but still represent a sector worth several hundred million dollars a year.

The financial analysts are clearly enamoured with IVE, its share price has been on the upwards march for the past two months, rising from $1.49 in June to $2.29 today.