Investors have pushed the value of its shares in Domino Printing Sciences to 946p, well above the price offered by Brother Industries, in an agreed bid for the UK company. The expectation is that Brother’s actions will provoke a counter offer and US company Danaher has been named as the potential rival to Brother.
Brother is to pay 915p a share valuing Domino at £1 billion. This is well above the price shares have been trading at recently and almost double their value from the low point in October. Domino’s revenues in 2014 were £350.2 million.
The Japanese company plans to leave the business intact, and considers Domino to be a strategic acquisition as inkjet coding and marking becomes more important, for track and trace of pharmaceuticals, for food safety and as the rise on online shopping drives more parcels. Domino has also been developing its own printing presses, first for label printing and most recently for transactional print. Establishing these will be a long haul and the more cautious outlook to investment Domino experienced in the second half of its last financial year underlines this.
Domino chairman Peter Byrom recognises also that in order to fund the expansion, further funds would be needed to continue the investment. He explains: “It becomes increasingly clear that maintaining its position in the enlarged markets will require Domino to find the appropriate partner that brings complementary skills and strengths in digital printing.”
That might equally describe Danaher. The US conglomerate reported net earnings of $2.6 billion for 2014 on revenues of $19.9 billion. It has already been active in the Cambridge area, acquiring coding specialist Linx to join an industrial technologies division that also includes Esko, Pantone, XRite and Videojet building a portfolio of products and services geared towards the packaging industry.
As well as its own inkjet printers, Brother is also active across different industrial sectors.
“Industrial printing offers an attractive opportunity and has identified Domino, with its established reputation, strategic direction and technological background, as a strong partner,” it says.
The company also believes that demand for short run packaging will increase rapidly and that this is a substantial opportunity. “Brother intends to invest in this market to grow the business, leveraging Domino’s achievements to date. The combined business will retain significant investment capacity to continue its global expansion, supported by the financial strength of the Brother Group,” the company says in explaining its offer.
Domino has realised that it cannot develop a new range of digital presses for the packaging industry without further investment. Brother has the resources and has promised to provide the money necessary to bring the machines to fruition.
