Vistaprint acquires Pixartprinting in €127m deal

Vistaprint will acquire a 97% stake in Italian web-to-print business Pixartprinting for a base price of €127m (£105m) while the company's founder Matteo Rigamonti will retain a 3% stake.

Pixartprinting is expected to have net debt of €18m when the transaction closes, while the agreement includes a sliding-scale earn-out of up to €10m subject to revenue and EBITDA performance targets for 2014.

The enterprise value (base price plus net debt) represents a valuation multiple of 9.8 times Pixartprinting's calendar 2013 EBITDA of approximately €15m. Revenue for the same year was approximately €56m, representing year-on-year growth of more than 35%.

Ernst Teunissen, executive vice president and chief financial officer of Vistaprint, told analysts that while both companies served a customer base of micro-businesses (fewer than 10 employees), the spend profile of those customers was entirely different.

"The customer base [of Pixartprinting] tends to be customers that order more frequently during the year and [have] larger order values; so they tend to be graphic designers, resellers, small printers that act on behalf of the end market," he said. "That results in revenues per customer that are more than 10x our average customer base.

"Pixartprinting has 90% of its revenues in three markets – Italy, France and Spain – of which Italy is by far the most significant [and it has] a 27% EBITDA margin which is very attractive and definitely a higher margin than Vistaprint."

Vistaprint said that the acquisition was complementary to both its traditional brand and its recently announced agreement to acquire Netherlands-based People & Print Group, which serves the Dutch and Belgian markets.

Robert Keane, president and chief executive of Vistaprint, said that Pixartprinting had "executed extremely well, growing both revenue and profits rapidly with high levels of customer satisfaction" and that Vistaprint could "learn from Pixartprinting while gaining product breadth".

He added that 70% of Vistaprint's sales came from heavily discounted commodity print sales to microbusiness and home/family customers and that the company's strategy was to to defend these revenues while growing its sales to "higher exepctation customers".

"In the past 2-3 years we have made a choice to really move and improve the Vistaprint value proposition away from [discounted] everything to something that’s targeting those [higher expectation] microbusiness," Keane said.

Rigamonti said: "The print market B2B online still has great potential. Vistaprint is an additional accelerator for us to approach new markets alongside a multinational company listed on the Nasdaq, with offices worldwide and synergistic to our business."

Alessandro Tenderini, Pixartprinting’s chief executive added: "We are excited about the opportunities this acquisition will provide us. We started as a family-run traditional printing business in 1994 and during the last decade, we have transformed into a successful web-to-print business that still places the customer at the center of our goals.

"We believe Vistaprint will be a strong partner for future international growth as we tap into its scale, global presence, financial strength, technology and manufacturing process expertise.”

Based in Quarto D'Altino, Veneto, Italy, Pixartprinting employs 330 staff and serves 100,000 customers across Europe. Subject to satisfaction of various closing conditions, Vistaprint expects the transaction to complete during its fourth fiscal quarter of 2014.