Paragon wins the hand of DST Output to create communications giant

Paragon has acquired DST Output’s UK operations, its biggest deal to date and one extending its reach into Direct Mail.

Paragon has acquired the entirety of DST’s print based customer communications business, bringing to an end a sales process that began a year ago when DST announced it wanted to sell its print business.

While the amount agreed has not been disclosed, it is Paragon’s largest deal to date, taking customer communication to £200 million in sales and bringing Paragon’s UK revenue to £250 million and its global sales to £600 million. It will operate from ten sites, eight from DST and Paragon’s Sunderland and Rotherham plants, with 1,800 employees in the UK.

Jeremy Walters, CEO of DST CC, becomes CEO of Paragon Customer Communications UK. Already the branding of the business is being changed, with staff answering phones with the new name and DST’s websites replaced by the new company.

“This has been the culmination of a lot of talking,” says Walters. “This brings scale but not conflict in the UK. We have been able to add one plus one to give two with the potential to grow to 2.5. In many other deals overlap means that 1+1 equals 1.8 before any opportunity for growth.”

All the former DST sites are retained, production sites at Dagenham, Bristol, Nottingham, Peterborough, Jarrow, a development office in Manchester and sales office in Edinburgh. At the end of last week Walters, together with Paragon COO Seán Shine, was meeting staff at each of the sites to explain the deal and will this week be meeting clients. The five largest were kept informed of the deal ahead of its announcement, Walters adds.

“We have 500 key customers, Paragon has around 150. They have all been spoken to and we will have face to face meetings with some of the larger companies in the coming weeks,” he says. After that comes a period of building the strategy and platform to exploit the potential of the enlarged business.

The group reckons that it is already delivering at least one piece of communication into every UK home once a week, either electronically or on paper. The extended capabilities for each of the previously separate groups will be offered across the customer range, providing the opportunity for growth. This will include being able to offer Paragon’s ticketing, security and contactless technology to DST’s customers.

The sale was prompted by DST’s strategic focus on software and BPO technology rather than print. However, the connection will continue with DST as an output partner. Despite this DST has continued to invest in the UK operation “and this will continue”, says Walters.

“It has been a really interesting process to go through, working with the management team of a global company and we’re really pleased with the outcome. The Paragon team led by Paddy Crean, Shine, CFO Laurent Salmon and John Rogers in charge of M&A are really straightforward, good traditional business people who really value their people and value their customers.”