The Office of Fair Trading approved the merger on 7 December, three days after Neopost posted its third-quarter revenue figures. Paris-based Neopost reported sales of £153.2m (€212.1m) for the three months ended October 31, a year-on-year drop of 4.4%, or 1.3% excluding the effect of currency exchange fluctuations.

UK sales fell to £27.2m, down 13.2% in total or 11.7% on constant exchange rates.

PFE, a privately owned company founded in 1963, generated £29.3m in sales in 2006, with almost 80% from outside the UK. The 480-staff company's distributor network covers 55 countries as well as 10 subsidiaries in Australia, the US, Singapore and seven European territories, including the UK.

Both Neopost and PFE offer folding and inserting products, but Neopost is mainly focused in the lower-volume market, while PFE is strong in the higher-volume market. The transaction will result in a more comprehensive product line for Neopost and a reinforced distribution market.

The transaction covers most of PFE's activities, representing sales of £27.5m in 2006, with an earnings before interest and taxation (EBIT) margin of about 5%. The transaction is based on an enterprise value of £27.2m, around one-time sales, and is financed by Neopost's existing credit lines.

Neopost, which specialises in mailroom equipment and logistics, recently won a sole supplier contract with Yorkshire Purchasing Organisation, the largest formal consortium for local authority procurement in the UK.