Business Services Sector Comment – August 2015

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The print industry has undergone a huge transformation over the last decade. Technology has changed the channels to market and forced industry participants to move away from traditional print-based businesses. Whether these market participants have morphed to become diversified digital media companies or followed a marketing services avenue, building digital solutions has been a key theme.

This month saw the announcement of the acquisition of the Financial Times by Japanese media group Nikkei, which outbid Berlin-based Axel Springer at the 11th hour. The deal – valued at €1,198m – is a good example of a company transitioning itself from a traditional daily print brand to digital as it looks to adapt to changing consumer preferences.

Back in 2012, the FT reported that – for the first time ever – digital subscriptions exceeded daily print circulation. At the time, online subscriptions stood at 300,000 – now, three years on, that number has risen to over 500,000, generating over 54% of total revenue. Equally, business publisher The New York Times has also aggressively been pursuing a digital strategy and recently announced that the number of digital-only subscribers has surpassed the one million mark. In today’s age, many traditional print companies would now refer to themselves as real-time cross-platform media businesses.

Other companies that were founded as print businesses have steadily evolved, aided by acquisitions, to take a different path and emerge as leading marketing services businesses. St Ives plc, for instance, originally started out as a print business five decades ago but now, following over 20 acquisitions, classifies itself as an international marketing services group of which delivering digital solutions is a key part. US-based RR Donnelley is a further example which, in its early life, was one of the largest custom mapmaking companies.

Despite these companies having diversified to provide a full marketing solution, print remains a critical component of the marketing mix and is far more than just printing marketing collateral. In fact, an integrated print management company looks at how best to optimise content, channel effectiveness and reduce costs, amongst other services.

In light of this, there continues to be high levels of M&A activity in the sector from both trade and private equity. For example: in April, Endless LLP acquired Adare in a €82m management buy-out. The deal followed the acquisition of office2office, the parent company of Banner Managed Communications, which Endless completed in 2014. On the trade front, Williams Lea, a global BPO giant and subsidiary of Deutsche Post DHL, acquired Tag Worldwide, the international design and production agency.

Here at Clearwater International, the print sector is an area we know only too well having recently advised on the management buy-out of York Mailing Group and the investment by Business Growth Fund in Hobs Reprographics. We expect to see continued interest in print management companies that provide integrated solutions to drive successful marketing campaigns. There are a number of well-capitalised marketing services companies looking to round-out their service offering in order to provide a full suite of solutions.

 

Notable Business Services Deals

Learning Technologies Group has acquired Eukleia Training Ltd, a UK-based company engaged in providing e-learning services to the financial services sector. LTG has agreed to pay €10.5m.

Impellam Group has acquired healthcare recruitment company Global Group Ltd. Impellam Group paid €40.7m for Global Group. The consideration includes an initial payment of €24.5m, assumption of debt of €10m and a deferred payment of €6.2m payable over the next 2 to 3 years. In addition to the consideration, Impellam will also pay earn outs of up to €11.9m dependent on the performance of Global Group’s Irish and Australasian businesses over the next 2 to 3 years.

W.W. Grainger, the listed US-based supplier of facilities maintenance products, has signed a definitive agreement to acquire Cromwell Group Ltd, the UK-based supplier of products used to maintain, repair and operate facilities in Europe.

Davies Group Ltd, the UK-based company engaged in claims management and loss adjusting services, has acquired Managed Fleet Services Ltd, the UK-based company providing claims management services.

The management of LJ Create Ltd, the UK-based digital educational solutions provider, has acquired the company from Infinitas Learning Netherlands B.V., the Netherlands-based provider of teaching and learning resources and a portfolio company of Bridgepoint Advisers Ltd, the UK-based private equity firm, for an undisclosed consideration.

Nationwide Accident Repair Services, the UK-based company that provides automotive crash repair and accident administration services, has agreed to acquire Just Car Clinics Group, the UK-based company that provides motor vehicle collision repair services, in a transaction valued at €17.7m.

Red Snapper Recruitment Ltd, the UK-based company that provides staffing services, has acquired Acumin Consulting Ltd, the UK-based company engaged in recruitment of cyber security and information risk management staff.

Advanced Personnel Management, an Australia-based human services organisation, has acquired Pertemps People Development Group Ltd, the UK-based recruitment company that provides employment and skills support services, from Employment Services Holdings Pty Ltd, an Australia-based provider of employment, training and recruitment services.

SPIE SA, the listed France-based company engaged in the provision of electrical and mechanical engineering services, has acquired Leven Energy Services Ltd, the UK-based utilities contractor that provides civil engineering, underground cabling & overhead line management, recycling and utility services including mains replacement.