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IVE’s $116 million takeover of Franklin & AIW

Monday, 05 December 2016
By Patrick Howard

Franklin Web's state-of-the-art Sunshine catalogue plant.

Huge play in large format web offset (LFWO) will consolidate the sector into two players – IVE Group and PMP, once the mergers on the table complete.

Phil Taylor, CEO Franklin Web, will run the Victorian part of the giant business, initially overseeing the transfer of AIW’s Springvale operation as well as Blue Star’s Display business in Victoria into his Sunshine plant. In Sydney, IVE is spending up to $18 million for the relocation of equipment and establishment of a catalogue production capability in Blue Star Web’s facility in Silverwater.

The move is a dramatic counter to the market dominance of PMP in LFWO if, as expected, its takeover of IPMG goes ahead. The sector will consolidate to two major players dominating over 90% of the catalogue market, one of the few sectors in printing that is recording continuing growth.

The proposed takeovers will undoubtedly be referred to the ACCC, which is currently assessing the competitive implications of the PMP transaction. It will now need to decide if the reduction of the number of major players in LFWO from five to two is anti-competitive.

IVE is paying a combined consideration of $116 million for both Franklin Web and AIW in a mix of equity and debt. This will ensure none of the major players bail from the sector, same as the Hannans staying on as major shareholders in PMP.

According to Geoff Selig, IVE chairman, the listing of the company on the ASX last year has enabled the deal. “[It] provided the foundation from which to pursue meaningful opportunities for the ongoing evolution and diversification of our business, whilst at the same time ensuring we continue to grow value for our shareholders.

“Like our own family printing business that was founded in 1921, Franklin is a third generation business founded by Len Taylor in 1936. I have known and highly respected Phil Taylor for many years, and strongly believe the coming together of the collective experience, passion and unparalleled capabilities of IVE, Franklin and AIW positions us incredibly well in the market to ensure our customers benefit from access to a unique global offering,” he said.

The sentiment was echoed by Phil Taylor, CEO Franklin Web, who said that while Franklin Web has been a huge part of his and his family’s life for a very long time, he’s comfortable with the deal.

“I very much look forward to being an integral part of the broader team as we execute on our vision for the business over the years ahead. I have no doubt that our dedicated staff, our suppliers and our customers will benefit greatly from the expanded product and service offering. I will also be pleased at the completion of this transaction to be a significant shareholder in the IVE Group,” Taylor said.

The third player in the takeover, Charles Garrard, chairman of AIW, agreed that industry consolidation in the sector is long overdue because of excess capacity. “Despite strong support from our customers and dedicated staff, for which we are extremely grateful, AIW is not immune to the effects of this overcapacity. We believe that a combined IVE, Franklin and AIW operation will be a robust competitor offering a more diverse value proposition for its valued customers.”

The takeover is expected to be effective December 13, 2016.

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