Pmp Takes A Bet On Books

The Age

Friday September 5, 2008

Jesse Hogan

A $21 MILLION expansion into book distribution will help cushion printing company PMP from any weakness in the magazine market, chief executive Brian Evans believes.

PMP has moved into books by buying independent Australia and New Zealand distributor Scribo for $21 million, along with a potential earn-out payment in 2011 depending on the performance of the new business.

The Scribo group was formed in February through the merger of the Tower, Gary Allen, Bookwise and Brumby book distribution businesses.

While books is a new area for PMP, Mr Evans described it as a "natural bolt-on" acquisition because of the overlap between the retailers who already receive magazines through PMP and books through Scribo.

"Most of these retailers we're already going to, so whether we're delivering magazines or books we can do that very cost effectively," he said.

Scribo has $50 million in revenue a year from its catalogue of more than 40,000 books, sourced from about 500 publishers.

PMP did not disclose an earnings multiple for the deal but predicted it would have a positive impact on its earnings per share for the current financial year, albeit once significant items were disregarded.

Scribo will be held within PMP's distribution division, Gordon and Gotch, and is expected to reduce the "cyclicality" of that division's earnings.

"Readership of magazines can be affected by an economic cycle, in the sense that if petrol prices go up magazines can go down," Mr Evans said. "Books is quite a different market, and very stable."

Mr Evans was not able to give an update on whether major client ACP Magazines was going ahead with a plan to build its own printing division, but said he expected it would be resolved in the "next few weeks".

PMP shares closed unchanged at $1.30.

© 2008 The Age

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