UK private equity investor Endless has made a recommended cash offer for Office2Office, the parent company of Banner Managed Communication.
The 51p per share cash offer values O2O at around £19.1m, and is an 84.6% premium on the group’s share price at the close of trading yesterday (20 August).
Endless has set up a new company, Evo Business Supplies, to acquire O2O.
It plans to take O2O private and merge it with Vasanta, which is already majority-owned by another Endless fund.
Last year O2O posted flat pre-tax profits of £4.2m on sales of £232m.
Vasanta claims to be the largest multi-channel distributor of business supplies covering the UK and Ireland. Its brands include Vow, Supplies Team Solutions, and Yes2. It had sales of £415m last year.
The merger will create a circa £660m turnover group, of which around 10% will come from the Banner Managed Communication business.
Banner was number 26 in last year's PrintWeek Top 500 with sales of £75.8m.
O2O’s board said the deal made sense due to “structural change and the need for consolidation in the group’s principal, but declining, business supplies sector”.
The board said the potential benefits of the takeover and merger with Vasanta were “compelling”.
O2O is currently in discussions with its lenders about refinancing its current facilities, which include a £30m asset-based lending facility, a £12.5m loan and £3m revolving credit line.
Its current arrangements expire in June 2015.
O2O is headquartered in Norwich and employs around 900 staff. It was formed in the year 2000 in order to acquire Banner Business Services from The Stationery Office.
The company floated a decade ago.
O2O shares jumped by 21.38p on the news to 49p (52-week low: 20.75p, high: 56.75p).
Endless already has the agreement of major shareholders that together hold almost 45% of the business.
Endless describes itself as “a transformational investor”, focused on businesses facing challenges or special situations.
The deal is subject to shareholder and regulatory approval, and is conditional on there not being a referral by the Competition & Markets Authority or its Irish equivalent.
Assuming all goes to plan, completion is expected by late October.
