Acquisitive US billing services group OSG aims to expand into Europe and will more than double in size through an all-cash recommended offer for Communisis that values the PLC at nearly £154m.
The deal, announced this morning (23 October), involves an offer of 71p a share from OSG Bidco, the acquisition vehicle. This is a 39.8% premium on the share price at the close of trading yesterday, and values Communisis at £153.8m.
OSG is headquartered in New Jersey and was acquired by private equity firm Aquiline Capital Partners in June 2017.
Its services include customer communications, billing and transactional services across digital and print channels and the highly-acquisitive business has made 17 acquisitions over the past five years, with seven buys so far in 2018. The firm expects to achieve pro-forma sales of $260m (£200m) this year, and EBITDA of around $64m.
OSG secured a $360m credit facility to fuel its acquisition plans in April.
Communisis chief executive Andy Blundell said: “OSG and their backers are intent on a growth strategy and their analysis of best-in-breed businesses for the next stage took them to Communisis. They made an approach in August and had done their homework.”
Blundell said the two firms were a good fit. “Digital technology is very important to our clients and we will now have access to a much richer array of technology. There’s a lot of synergy, and OSG sees a lot of value in Communisis and in the people and client relationships we’ve got.”
The offer has been recommended by the Communisis board, and has been given the green light by a number of large investors including major shareholder Richard Griffiths.
OSG has already received irrevocable undertakings and letters of intent from Communisis shareholders accounting for 42.9% of the group’s shares.
Blundell also said there were “no concerns” about the firm’s pension scheme, which had a deficit of £32.4m at the half-year.
“OSG have been very professional about their commitment to the pension scheme and are very aware of the ongoing liabilities and making sure they meet them. There are no concerns on that front," he stated.
Communisis employs around 2,000 staff and had sales of £375.8m last year, so the aquirer will more than double in size through the deal.
In a statement, OSG chairman and chief executive Scott Bernstein said: "This is a significant development for our business and we believe that uniting Communisis and OSG will be an important step in building one of the largest and most competitive outsourced customer communications platforms serving businesses globally.”
The commentary attached to the offer document describes the Communisis Customer Experience division, which includes printing, as “the most directly complementary”.
It also stated that the Communisis Brand Deployment sourcing division has overlap with both Customer Experience and the broader OSG Group “and may require its own focused strategy as part of the enlarged group”
PrintWeek understands that Blundell will remain with the business, with OSG viewing the firm’s leadership and management teams as a key asset.
Blundell said the news was being communicated to employees and customers this morning.
A scheme document containing more details is likely to be published at the beginning of next month, and if the deal goes through as expected it could complete in December.
“It’s business as usual in the meantime. People are pretty excited that we will be part of a much bigger business, truly global and with access to a much bigger array of technology,” he added.
OSG said the Communisis name would be retained for at least 12 months, and, assuming the takeover goes ahead, the firm will be de-listed from the Stock Exchange and re-registered as a private company.
Communisis shares rose to 70.61p, just below the offer price, in early trading (52-week low: 47p, high: 73p).