The Australian merchanting and paper production group has offered Buhrmann 522m (Euro746m) for the division, which includes Howard Smith Paper, Robert Horne Group and M6 Paper Group.
Last year, PaperlinX bought Bunzl Fine Paper for 138m as a platform for future growth in the UK and Europe (PrintWeek, 28 June 2002). The Buhrmann deal would see PaperlinXs sales more than double from 1.4bn to 3.5bn. And the buy will give it a 45-50% share of the UK paper merchanting market.
Buhrmann corporate communications director Ewold de Bruijne said the group had originally no plans to divest itself of the operations, but had received an offer four weeks ago that it found hard to refuse.
It presented a significant opportunity to lower our debt, which we had to put to shareholders, said de Bruijne.
As a whole, the deal provided a very good match given PaperlinXs management approach and position in paper merchanting, he added.
PaperlinX now has exclusivity for the next four weeks and is expected to start due diligence procedures shortly.
Buhrmann reported a 4.4% fall in net sales for its paper merchanting business to 1.9bn for the year to December 2002. Overall, the group had a loss of 394m for 2002, against a 37m profit for 2001 (PrintWeek, 21 February).
Buhrmann president and chief executive Frans Koffrie said that reduction of debts was a priority for 2003. The offered purchase price represents a fair valuation of the assets involved despite the current difficult market circumstances. We have therefore pursued this opportunity, which the board firmly believes to be in the interest of shareholders.
The deal is expected to be completed by the third quarter following due diligence, regulatory approval, the consent of Buhrmanns banking syndicate, the approval of shareholders and the works council and trade union.
Story by Rachel Barnes and Andy Scott
Have your say in the Printweek Poll
Related stories
Latest comments
"I have worked in quite a few print sectors, including Walstead in the past. It is all tough, but most will not be surprised that the packaging sector is still growing. However, the service in the..."
""longer run litho work had “now returned to the Far East”?
Is this happening a lot?"
"Thanks Jo, look forward to reading it in due course. Administrators generally argue that they need to act with lightning speed in order to protect the business/jobs, thereby overlooking the fact that..."
Up next...
Revenue up to £3.2m, profits quadupled
Footprint picks up pace of acquisition strategy with Swindon’s C3
Controversy emerges over relationship with potential suitor
National World shares soar on takeover approach
24/7 access for customers
Bakergoodchild launches new SaaS platform
Strategic move for global growth