SPOT: Paragon Group buys two businesses

Thursday, May 14, 2020

Paragon Group has acquired the OfficeTeam and ZenOffice businesses after parent group Spicers Office Team (SPOT) went into administration.

Paragon: another major buy for acquisitive group
Paragon: another major buy for acquisitive group

Spicers Office Team (SPOT) filed a notice of intention to appoint administrators last month, after it emerged that the firm’s board and private equity owner Better Capital were working urgently to find a buyer for the business. 

Administrators Hunter Kelly and Charles King of EY were appointed earlier today (14 May)

In a statement, Paragon Group CEO Sean Shine said: “We are delighted to welcome OfficeTeam and ZenOffice to the Paragon Group, adding their expertise to our growing range of Workplace Solutions and Business Services. Paragon continues to assess markets to ensure we align our service offering with our customer demands and this acquisition addresses existing customer requirements.

Shine took over as CEO three months ago

“Operationally and financially, Paragon is a strong, disciplined and ambitious company and prides itself on being customer focused. Together, we deliver the future of Workplace Solutions and Business Services. The acquisitions underline Paragon Group’s ongoing commitment to being the market-leading service provider for businesses in the UK.”

OfficeTeam is a nationwide distributor of stationery and office supplies that works with blue-chip clients, and its supplementary business services include print management.

It says it has 12,000 customers, and supplies 100,000 products. 

ZenOffice focuses on SME customers and offers a wide range of managed solutions from one source, including managed print services (MPS), mail and fulfilment, signage and exhibition, workwear and PPE and business interiors. 

The acquisition of ZenOffice is subject to FCA approval, because the business provides finance services.

OfficeTeam CEO Steve Horne remains with the business.

He said: “Growing to meet the changing needs of our customers has always been our key priority, therefore becoming part of Paragon Group is an exciting opportunity for the business and for our customers, as we will now be able to provide even greater supplier consolidation and operational cost optimisation at a time when our customers need it most.”

The overall SPOT Group had sales of £281m in 2018.

Sales at OfficeTeam Group for the same period were £146m and it made an operating loss of £1m (prior year operating profit: £2m).

In the commentary, its directors said that 2018 had included a number of non-recurring costs, and that its product diversification strategy had “put the group in a strong position” to compensate for some of the difficult market conditions in the traditional office supplies market.

At the time nearly 50% of sales came from “non-traditional” categories.

The business disposed of its Waterlow Business Supplies and Oyez Professional Services businesses in March 2019. These had combined sales of £4.9m and made an operating profit of just under £1.7m.

ZenOffice had sales of just under £15m, and made an operating profit of around £500,000.

Prior to this latest deal, the highly-acquisition Paragon Group had projected sales of €1.2bn (£1.06bn) for the current financial year ending in June.

The group is the biggest printing business in the UK, and is number one in Printweek’s annual Top 500 survey. It also has operations on the continent, in the US, India and Australia.

In a statement, Better Capital said: “As previously communicated, the impact of the current Covid-19 crisis has had severe consequences on the businesses trading within the SPOT group.  A full range of options to protect the business and its employees has been thoroughly explored, and the best solution for the group's businesses, its workforce and for Fund II, was a sale, (via the appointment of administrators by the Directors) of certain group assets, to a subsidiary of Paragon Group for an undisclosed sum. The sale does not include some other assets, principally the freehold property.”

Better Capital said Fund II had advanced £7.8m of secured debt to SPOT and expected to “recover part or all of this sum during the administration”.

Fund II's equity investment in SPOT “is likely to be worthless”.

Wholesale office supplies wing Spicers Ltd also went into administration with EY on 14 May, and ceased trading the same day. 

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