OVATO IN ADMIN: IVE LINES UP BID

Diversified marketing services group IVE is aiming to buy stricken heatset giant Ovato, entering an Implementation Deed with administrators FTI Consulting this morning.

Under the terms of the Implementation Deed the two parties have agreed to good faith negotiations for the signing of an asset sale, in which IVE would acquire all or parts of the business or assets of Ovato.

Matt Aitken, CEO at IVE said, “We want to see the customers retained, see the channel supported and to keep people in their jobs. We want a good, healthy, print industry.”

IVE is now spending the next two weeks going through due diligence on the deal, which will be subject to clearance from the ACCC, and if IVE firms up the Implementation Deed into a binding offer the timeline for a purchase will depend on the ACCC. IVE has said its view is that there are “strong arguments to support competition clearance for the proposed transaction.”

The ACCC appears to have broadened its approach in recent times, recognising the business imperatives it waved through the sale of Ovato’s books business to Opus in double quick time.

Print21 understands IVE has not yet decided if it will want to buy all or just parts of the Ovato business, which comprises the supersite in Warwick Farm with seven heatset webs, heatset plants in Brisbane and Perth, commercial printers in Cairns and Auckland, and its Brisbane-based packaging business.

Ovato’s customer list includes the biggest magazine publisher in the country, Are Media, which is also an IVE customer, and major retailers who place their catalogue work with Ovato. Catalogues in fact is the biggest part of the business, comprising around 60 per cent of the work, with magazines 25 per cent, and packaging seven per cent.

Revenue at Ovato will be revealed shortly in its annual accounts, for Australia the first half was $123m. Ovato was a billion dollar a year business when PMP and IPMG merged.

Ovato was placed into voluntary administration by the directors three weeks ago, following losses that have totalled $430m over the past five years, and despite a restructure 18 months ago that saw $40m injected into the business, a quarter of the 1200 staff made redundant as the company closed its Victorian manufacturing site in Clayton, and suppliers asked to take a 50 per cent cut in outstanding invoices. Since then a large scale sale process has been underway, with virtually every part of the company that is not core sold off. In addition the New Zealand heatset business was shut down. The company said “market volatility, raw materials increases and legacy cost issues” were the contributing factors to the administration.

IVE by contrast has seen consistent profits since its launch on to the ASX in December 2016, and has pursued a strategy of diversification in the years since, while still focusing on heatset as a core activity.