- Positioning as No. 2 in European gravure printing
- Significant increase in revenue share of European market and magazine business
- Slight positive contribution to earnings per share within the first year of consolidation
Freudenstadt, October 10 2006. schlott gruppe will acquire all interests in Dutch-based Biegelaar B.V., Maarssen, currently controlled by bencis capital partners. The relevant purchase agreement was signed today. The transaction remains subject to the official authorisation by Germany's Federal Cartel Office.
In acquiring Biegelaar, the second largest printing company in the Netherlands, schlott gruppe has reaffirmed its long-standing strategy as a driving force behind consolidation within the European gravure printing industry. The company has now established a strong position as number two in the European gravure printing market; its market share will rise from 9.1 to 11.6 per cent. Yet again, schlott gruppe has succeeded in taking over a healthy, very profitable enterprise: earnings per share of schlott gruppe are expected to increase slightly within the first year of acquisition.
In addition to strengthening its position within the competitive arena, schlott gruppe will achieve two other strategic goals: continued diversification of its customer base as well as expansion of its revenue share of non-catalogue business.
There is no overlap in the customer base currently served by the companies: schlott gruppe will further strengthen its market position in the lucrative Benelux region, while also enhancing its overall competitiveness in Northern/Western Europe through the additional production site in Maarssen. Biegelaar's activities are mainly focused on magazine printing. The share attributable to this category within schlott gruppe's overall product portfolio in the print division will thus rise from approx. 20 to 28 per cent; in parallel, the proportion of catalogue business (standard mail-order operators) will decrease from 45 to 40 per cent. The share of supplements will be 32 per cent after 35 per cent before.
Biegelaar will be acquired at an EV/EBITDA multiple that is below the current valuation of schlott gruppe and is thus expected to make an immediate contribution to enterprise value. The company's projected value-added sales (VAS) for 2006/7 are around €25 million. The equity portion of the purchase consideration is to be settled in cash using existing bank credit lines. At the point of initial consolidation schlott gruppe's gearing (net debt/EBITDA) will remain within the strategic parameters, the upper limit being set at around 3.5, and will be scaled down significantly within the first twelve months. The date of first-time inclusion in the consolidated group is expected to be October 1, 2006 subject to the official authorisation by Germany's Federal Cartel Office.
Employing some 200 members of staff, Biegelaar has four highly flexible mid-width rotary printing machines, as well as postpress capacities at the Maarssen plant, which is located south of Amsterdam and is thus well situated in terms of logistics. Following substantial investments in recent years, the location is equipped with efficient organisational structures and state-of-the-art machinery. By utilising this additional capacity, schlott gruppe expects to achieve mid-term growth that is beyond market trends both in terms of revenue and earnings.
Notes to financial data:
Alongside “revenue/sales”, schlott gruppe uses so-called “value-added sales” as a financial indicator – both in its external communications and as part of its internal controlling mechanisms. Revenue is subject to fluctuations that are beyond the company’s sphere of influence. These fluctuations are attributable to the volume of paper supplied by customers as raw material for certain projects: in contrast to paper purchased directly by the company, paper supplied by customers is not included in the accounts of schlott gruppe. In the 2004/5 financial year, the so-called paper provision ratio was 73.2 per cent. As a financial indicator, “value-added sales” eliminates fluctuations relating to paper supplied by customers, thus reflecting the actual business performance.
