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IPMG bid for PMP attracts the attention of ACCC

Tuesday, 20 March 2001
By Print21

Professor Allen Fels’ regulators at the ACCC are examining the concentration of printing and publication distribution power that will occur if the union between Independent Print Media Group (IPMG) and PMP goes ahead. PMP is Australia’s largest commercial printing company with about 20 per cent share of the overall market. It has over 50 publication titles, including market leaders such as Elle, New Idea and TV Week. The new entity would see magazine distributor Gordon & Gotch in the same stable as rivals NDD and Impact.

The deal will give IPMG a controlling 40 per cent in the enlarged PMP, crerqating a printing, publishing, prepress, distribution and services enterprise with annual sales of A$2.2bn. Significant rationalisation benefits are expected if the deal goes ahead.

US-based director, Jim Donnelley, of RR Donnelley & Sons, one of the world’s largest printing companies, has stepped forward to replace Ken Cowley as PMP chairman following his sudden resignation. Cowley said he may not be able to contribute in a positive way to the transactions currently being considered by PMP because of potential conflict of interests.

The merger was announced March 1 without formal reference to the ACCC, which admits it, was surprised. It is now canvassing opinion throughout the industry as to its effect on competition, especially in terms of printing capacity. If the reverse takeover is allowed to go ahead, approximately 80 per cent of heatset web printing in Australia will be under the control of the proposed super printing and publishing company. No formal response from the ACCC was forthcoming at time of writing.

The merger comes as PMP management is under the gun for a profits warning to the sharemarket that sees the troubled enterprise post a dismal $45m profit as opposed to last year’s $59.1m. Analysts blame a significant drop in circulation numbers, averaging 10 per cent for the slump, as well as troubled publishing investments in Germany, the effect of the GST and the Sydney Olympics.

The printing division performed well, increasing its returns by 3.6 per cent even though sales were down by 2 per cent.

IPMG is privately owned by the Hannan and John B Fairfax families. The deal values it at $250 million. It has sheet and web prnting faclities in NSW, Queensalnd and Victoria. It owns the Courier Newspaper Group as well as a range of magazines. Managing director, Michael Hannan said, “Apart from areas where each group complements the other, the merger will take IPMG into areas in which we have not operated, principally books, directory printing, letterbox distribution and mass market publishing.”

The roll call of printing and prepress companies that will comprise the new company is impressive. Although PMP has rolled all its entities into one printing division, with the exception of Griffin Press, division it comprises such industry icons as: Pac-Rim, Progress, Keppell, Pacweb, Canberra Press, Westernport, Wilkies, Swanweb, Prestige, West Web, and South Web. Production house Show-Ads is an integal part of its graphics operations.
IPMG has Hannanprint, Inpack, Inprint, Offset Alpine, Craft Printing, Bolton Inprint and The Pot Still Press.

The merger is subject to receipt of written confirmation from the ACCC that it has no objections.

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