22 July 2018 Business

Walstead drives east with acquisition of Poland's largest print group.

Walstead is continuing its consolidation of Europe's volume print sector with the acquisition of the former Donnelley operation in Poland.

Walstead Group is close to completing its largest deal to date, the acquisition of LSC Poland, the former RR Donnelley operation in Poland. “This is a transformational deal for us,” says Walstead chairman Mark Scanlon, increasing turnover by 40% to take annual revenues to more than €730 million.

This operation Walstead is buying comprises six plants, three web offset factories. Premedia and sales operations generating sales of $200 million. Two plants are close to Krakow in the south of the country with the third also close by, south of the capital Warsaw.

On its own LSC Poland is reckoned as the seventh largest print group in Europe and also responsible for LSC’s global turnover. This will now be even more concentrated in the US where It has itself been acquisitive, bolting on acquisitions in North America.

Once given the green light by regulatory authorities, LSC Poland will become a fourth standalone division within Walstead alongside the UK Wyndeham business, Walstead Iberica covering its Spanish businesses and Walsted CE operating plants in Austria, Slovenia and the Czech Republic. The new division will be rebranded but there is no name yet. Grzegorz Czech, currently CEO of LSC Poland, will stay with the business along with 2,000 staff.

The deal brings the group headcount to 4,400 adding 23 web offset presses and five sheetfed machines which in 2017 processed 220,000 tonnes of paper and printed 105.2 billion A4 pages. This brings the group arsenal to 70 web offset and four gravure presses across 19 production sites.

It continues Walstead’s drive to participate in consolidation of the European web offset market, something that Scanlon says “is becoming increasingly necessary to ensure print remains a viable and economical communication medium that can continue to meet the challenges of the digital world”.

It is not alone. Italian group Pozzoni, which this year bought Clays from St Ives through its Elcograf subsidiary, has since added NIIAG in Bergamo and Eurogravure in Treviglio, taking the group headcount to 3,000.

There is the potential for some cross fertilisation between the new division and existing operations. RR Donnelley’s original investment in Poland was based on production close to the then emerging pan European motorway network. Trucks would be able to reach into Russia and elsewhere in the developing former eastern bloc countries.

The operation would be able to print magazines, publications and catalogues that needed an international distribution, brochures for Volvo vehicles’ distribution network for example. This is still the opportunity, says Scanlon, adding that there is an additional opportunity from using the wider group facilities. This might also reduce the number of truck journeys that are needed, something that is being assessed, he says.

“The combination of Walstead and LSC Poland creates a business with unmatched geographical reach and production resource to support Europe’s largest retailers, catalogue, magazine publishers and brand owners. I firmly believe printed media has a long lasting place with consumers and provides our customers with a measurable, trustworthy and reliable channel to market.”

The deal is being financed through bank funding, though there is no figure put on the deal. It will however, reduce LSC debts by $60 million, its revenues by $250 million and Ebitda by $12 million according to the vendor.

“The monetisation of our European operations is another step in our strategic plan, which is focused on pioneering services and solutions that drive long term growth and create the most value for our core client segments,” says LSC Communications chairman Thomas Quinlan III. “Walstead’s position as one of the leading web offset commercial printers in Europe will create new opportunities for LSC Poland to expand even deeper into the European market.”

Yet despite this strategy, the American company was not seeking a buyer until Scanlon says he made the first approach to LSC: “This wasn’t part of a formal or wider marketing process.”

Gareth Ward

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Plant at Krakow

Plant at Krakow

Walstead is buying three web offset factories in Poland just weeks after completing a deal to buy NP in Austria. While no price has been announced, it is one that is transformation says chairman Mark Scanlon.

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