Mercian acquired the assets and goodwill of AC Labels in April 2010, one month after the company was placed in administration.

Since then Mercian has invested significantly in the business, which has diversified from solely producing long-run variable barcode labels to also producing non-variable flexo print.

Mercian Labels managing director Adrian Steele said that part of the reason for initially keeping AC Labels separate was out of "prudence" but added that the merger was more to do with "changing market conditions".

"The direction and specialism of AC Labels has got closer to Mercian to the extent that they could be viewed as rivals for the same work," said Steele. "When we acquired AC Labels it was solely doing variable barcode work and nothing else and our Staffordshire site was solely doing short-run digital.

"As the market has changed, AC Labels has taken on other types of flexo printed work that fits closer to the historical client base of Mercian, which in turn has taken on more medium- and long-run work as the economies of digital have changed.

"What we've ended up with is an end-to-end business split across two manufacturing sites, so it made sense to merge the two companies."

Steele stressed that the merger was solely a "paperwork exercise" and that there would be no relocation of either operation. He added that the AC Labels brand would no longer be marketed and would be "subsumed" over time into Mercian's brand identity.

The merger will allow both businesses complete access to each others' facilities, from materials, through pre-press, to a wide range of finished goods.