The deal was announced in a financial filing from RR Donnelley at the close of trading on the New York Stock Exchange on Monday 28 October. The purchase was finalised on 25 October.
The sale price was not disclosed. GDS is headquartered in the UK and has operations in France, Spain, Germany, the Netherlands, Poland and Italy and employs around 1,500 people. Net sales were approximately $270m (£210m) in 2018.
Back in 2005 RR Donnelley paid almost $1bn – £520m at the time – to acquire the Astron Group of business process outsourcing companies that were the foundation of the GDS business.
In a statement Crean, Paragon’s chairman and chief executive officer, said: “We are delighted to acquire RRD’s GDS European businesses and are pleased to announce that we have also entered into a strategic alliance with RRD, which will expand the offerings both companies provide to clients.
“We welcome the GDS team to Paragon and look forward to the value and expertise they will add to our full-service range of leading marketing, communications and technology solutions for our customers.”
The business will become part of Paragon’s Customer Communications business unit.
An industry source commented: “This is an extraordinary business story. It’s absolutely fascinating – what will Paddy do next?”
RR Donnelley GDS works with blue-chip clients in financial services, insurance, investment banking, retail, legal and property.
The UK business had sales of £194.3m in 2018. It made a £6.7m pre-tax profit before exceptionals, but restructuring costs and goodwill write-downs totalling £6.2m helped propel the business to a bottom-line loss of £490,000.
RR Donnelley’s entire European business had sales of $485.9m (£377.6m) last year, up from $455m in 2017 and restoring turnover to the level achieved in 2016.
Last year $6.8bn turnover RR Donnelley reorganised its business into two segments: Business Services (83% of sales) and Marketing Solutions (17%). It also sold its Print Logistics business last year.
CEO Dan Knotts described the GDS sale as “another key step” in the group’s strategic transformation and optimisation of its business portfolio.
“The strategic alliance we have established with Paragon, the European leader in communications solutions, enables us to offer an enhanced set of capabilities in the region,” Knotts said.
“I want to thank the GDS team for their tremendous support of RRD and wish them future success as they join the Paragon team.”
Privately-owned Paragon Group posted record results with sales of €673m in 2018, with pro forma sales reaching €857m on the back of a string of acquisitions, most recently parts of the Howard Hunt group.
Crean is the current number one in Printweek’s annual Power 100 ranking of print’s most influential individuals. He has helmed an astonishing growth trajectory at Paragon, with multiple takeovers helping propel the business to the number one spot in Printweek’s Top 500 survey, as well.
Paragon Group was also named in the Sunday Times Top Track list published earlier this month.
Former printing industry giant RR Donnelley split into three separate businesses in October 2016: RR Donnelley, LSC Communications and Donnelley Financial Solutions. Two months ago RR Donnelley instigated a so-called “poison pill” rights plan to thwart any plans by activist investors to wrest control of the company.
