In settlement, Promentum will issue 14.1 million $1.70 shares to PMP, valuing the transaction at $24 m and making PMP the Promentum’s biggest shareholder, with a 26 per cent stake. Under the terms of the deal, PMP will appoint a non-executive director to the Promentum board and Promentum will provide sheetfed printing services to PMP. The deal is subject to Promentum shareholder approval and PMP will book a $12 million accounting profit from the sale.
PMP chief executive, David Kirk, said the deal would hardly be a surprise to the market. "We’ve said to the market for some time that we know our sheetfed assets are not well-positioned", says Kirk. "We have had a lack of investment over a long period of time and we don’t have a dedicated sheetfed sales force. We haven’t been in a position to drive the sheetfed business as well as we’d like so we’ve been considering a number of options".
The deal with Promentum will enable PMP to keep an interest in sheetfed printing, says Kirk, while allowing it to concentrate on its heatset web printing operations which enjoys a powerful 45 per cent share of the Australian market. "We’re not exiting sheetfed, we’re restructuring our position in the industry", Kirk says. "We are very pleased to have found such a solid future for these businesses with an expert, broadly based and well-capitalised sheetfed player".
According to Promentum chief executive, Alistair Hill, the deal will cement his company’s pole position as Australia’s biggest sheetfed printer with an estimated 10 per cent share of the highly fragmented sheetfed sector upon completion in February 2005. "We will now have the leading market position in Queensland, New South Wales, Victoria and Tasmania", says Hill.
Hill says that Promentum will focus its efforts on producing marketing material for the banking and finance, insurance, entertainment and gaming sectors.