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IPMG backs up for another go at PMP

Thursday, 06 September 2001
By Print 21 Online Article

Less than five months after being knocked back by the ACCC in its efforts to take over PMP, the Independent Print Media Group (IPMG) is back in the fray spending over $10 million for eight per cent of the company’s shares as a sign of its “serious commitment to implement this merger.” The Fairfax and Hannan family owned publishing, printing and media group “invited” PMP to re-open merger negotiations via a media statement which caught the board of the ailing printing and publishing giant by surprise.

In response PMP said, “IPMG’s media statement… comes as a surprise to the company. PMP has not received any indication of transaction terms or structure from IPMG, aside from the broad references contained in IPMG’s media statement.”

The move is part of a long determined campaign by Michael Hannan, IPMG’s managing director, to become the largest printer in Australia. He is confident the Australian printing environment has changed sufficiently since May to get agreement from the ACCC, with whom the company has had extensive discussions over recent months.

Key to the new marketplace is the entry of Singapore-based Time Publishing Group, which as Argyle Times picked up the Melbourne plant of defunct Diamond Press. In addition the imminent opening of the Webstar heatset web printing plant in Sydney along with the success of AIW group in Victoria means there are now more vibrant competitors in the game.

Despite this, if the merger goes ahead the enlarged company would still control about 70 per cent of the contract printing market and 80 per cent of the magazine distribution market in Australia. To further allay ACCC fears, and the objections from customers such as Kerry Packer’s ACP, if successful IPMG would off load a major part of PMP’s printing capacity.

In its media release it said, “following discussions with the ACCC and considering the concerns raised by customers for the need to have an alternative printer capable of handling the largest and most complex jobs, IPMG has proposed the sale of significant stand-alone heat-set printing capacity in the form of PMP’s heat set and commercial printing operation situated at Clayton, in Victoria, once a merger has been implemented.

“This operation currently produces a wide and comprehensive range of publications, including the largest magazine printing job in Australia and many other significant magazine titles.”

IPMG maintains that whoever buys the Clayton operation would be another significant competitor in the printing market with the ability to print a comprehensive range of publications and supply a full range of printing services. The money raised would also go towards reducing PMP’s backbreaking $500 million debt and “enable it to reinvest in upgrading plant.”

The suggestion to dismember the profitable printing component was not well received by PMP, which responded, “IPMG’s suggested sale of PMP’s Clayton heat set printing operation is not consistent with the company’s view of how best to maximise PMP shareholder value. “

The original merger deal was for IPMG to merge itself into PMP in order to gain a controlling stake. At that stage it was valuing PMP shares at $1.55. So how lucky can Michael Hannan be? PMP is now selling for 60 cents after sinking to a low of 38 cents in July.

The issue is complicated by the recent arrival in PMP of Kerry Stoke’s Seven Network, which spent $20.35 million for a 12.7 per cent stake. It also is not overly enthused at the IPMG gambit. “We don’t think this is the time for PMP to be looking to dismember its business as proposed by IPMG,” Seven said in a statement.

At time of going to press the ACCC is making no comment.

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