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Printer buys T.O. specialist PDF Print E-mail
Wednesday, 22 August 2007

Master printer Transcontinental Inc. yesterday bid $103 million cash for Toronto premedia and digital printing specialist PLM Group Ltd. in a friendly deal that would add $126 million to annual revenue and boost its stake in direct marketing. Transcontinental, North America’s sixth-largest commercial printer, offered $3.50 a share for PLM’s 29.5 million shares outstanding, or a 19-per-cent premium over the market price on Aug. 13, the day before PLM said it was talking with a single buyer.

Master printer Transcontinental Inc. yesterday bid $103 million cash for Toronto premedia and digital printing specialist PLM Group Ltd. in a friendly deal that would add $126 million to annual revenue and boost its stake in direct marketing. Transcontinental, North America’s sixth-largest commercial printer, offered $3.50 a share for PLM’s 29.5 million shares outstanding, or a 19-per-cent premium over the market price on Aug. 13, the day before PLM said it was talking with a single buyer.

The premium is 25 per cent over PLM’s closing price on Monday and PLM’s founder and CEO, Barry N. Pike, who owns 51.2 per cent of the shares, will support Transcontinental’s bid. Including debt, it is worth about $130 million. Commercial printer Transcontinental Inc., which was founded by executive chairman Rémi Marcoux, employs 14,500 workers in Canada, the United States and Mexico. PLM’s directors, with a fairness report at hand, unanimously back the deal, but it still needs a two-thirds majority vote from all shareholders.

Closing is due in October. Pike and senior management will stay on. Transcontinental’s CEO Luc Desjardins said the deal will double the company’s business in Greater Toronto region and provide at least $4 million of synergies over the next 18 months. It will pay for PLM from its credit lines. PLM has 470 employees at four plants in Toronto and no shutdowns are planned, he told analysts. PLM will not have much impact on Transcontinental’s fiscal 2007 results, but there will be a “slight accretion” in fiscal 2008. “In 19 years, fast-growing PLM has built an important niche serving financial institutions, retailers and publishers with a wide range of commercial printing products,” he said.

“They’ve grown by acquisition and have invested heavily in digital technology … even ahead of us,” he added. “We see this as a very promising partnership. There’s very little overlap and some spare capacity exists in their plants.” With PLM, Transcontinental will become a leader in the fast-growing Canadian direct marketing industry, he said. It is already a major player in U.S. direct marketing. “PLM’s sales force is dynamic and we see lots of cross-selling opportunities.” The PLM deal is a sound long-term investment, but not the landmark Transcontinental acquisition the market has been waiting for, said one analyst who preferred not to be named. This most likely will come in the U.S. further down the road, he added.

Transcontinental, headed by founder and executive chairman Rémi Marcoux, is Canada’s largest commercial printer. It has 14,500 employees in Canada, the U.S. and Mexico. It is also a leading producer of consumer magazines and of community newspapers across Canada. It prints La Presse at a new $100-million printing plant in Montreal and also other Canadian and U.S. daily newspapers at its regional plants. Its fiscal 2006 revenue was $2.3 billion.

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