mergers & acquisitions 
The rationalisation of the printing industry has continued, with printing giant Penfold Buscombe acquiring the business and certain key equipment of respected Sydney printer Pongrass Communications Group in support of its current sales push. Pongrass Communications, which operates as Websdale Printing, Pot Still Press, Pongrass Digital businesses, is expected to provide additional annual sales that will lift Penfold Buscombe from $93m in 2002/03 to over $120m in 2004/05. It will also bring a healthy addition to Penfold Buscombe’s customer base, including contracts with Westpac and Toyota.

The purchase continues Penfold Buscombe’s march toward becoming one of the premier printing outfits in the country, operating facilities in Sydney, Melbourne, Brisbane and the Gold Coast. Last year, the company consolidated its RT Kelly, Mockridge Bulmer and Concord Communications businesses under one roof at its new purpose-built East Botany site in Sydney, operating around a new 10-colour Heidelberg Speedmaster.

The total purchase price will be approximately $7.5m, which is subject to completion adjustments. In addition to the business, the purchase will include the acquisition of selected equipment, including a near new Heidelberg 12 colour perfecting press, the only one of its type in Australia. This will support the expected incremental sales growth of Penfold Buscombe at its East Botany site.

It is the intention of Penfold Buscombe to integrate the Websdale and Pot Still operations into the company’s East Botany site, and take on the lease of the Pongrass Digital site. Penfold Buscome also plans to offer employment to 55 of Pongrass Communications employees. According to Alistair Hill, Penfold Buscombe managing director, Tom Pongrass, Websdale Printing managing director is planning to retire and will not make the move to Penfold Buscombe, while Scott Telfer, Websdale Printing general manager, will take up a senior member position of Penfold Buscombe’s national management team.

"We are delighted to have Scott on board with us. He will be a welcome addition to our team," says Hill.

Ian Elliot, Penfold Buscombe chairman, says, "We have stated that selective acquisition is a core part of our future strategy. This acquisition provides an excellent opportunity to strengthen our offer to the market and is another positive step in the ongoing consolidation of the printing industry.

"Clients are voting with their feet and major contracts including Allianz, AXA, Tabcorp/Star City and National Australia Bank have been won by the team in the last 18 months."

Hill says, "This acquisition builds on the scale and efficiency of the East Botany plant and integrates with our operations in Victoria and Queensland, further enhancing our ability to provide customers with complete end to end print communications solutions. Our new digital printing capability will broaden our service offering and complements our leading position in innovative direct mail solutions.

"When we established the East Botany site in January 2003, we specifically planned for expansion of the business, including growth through acquisition. The addition of the 12 colour press to the East Botany site is a strategic move which addresses an important capital expenditure requirement of the company going forward. Most significantly, it will provide us with additional production capacity to meet the increasing needs of our customers.

"Penfold Buscombe has a history of having integrated successfully ten brands over the past eight years. In recent times, this has been evidenced by the successful integration of Penfold Buscombe’s Sydney operations, which contributed to our strong half-year results. The integration of acquisitions is a core competency of the group and we are confident of a smooth transition with respect to Pongrass Communications."

The cash component of the purchase consideration will be funded through a partially underwritten Share Purchase Plan, raising up to $3.7m of which $3m is underwritten. The plan is currently available to Penfold Buscombe shareholders and will be so until mid May.