Competition watchdog the ACCC says it won't oppose IVE Group's acquisition of Ovato .
IVE and Ovato overlap in heatset web-offset printing, which is used to produce a range of printed materials in Australia, including magazines and retail catalogues.
However, Ovato has been in voluntary administration since July 21.
IVE, a marketing, communications and printing group, has an agreement to acquire substantially all of the assets of Ovato for $16 million.
Annual revenue of Ovato’s Australian web offset printing operations are estimated to be $160 million. IVE intends to operate Ovato’s WA (Bibra Lake) site, and for about 18 months Ovato’s NSW (Warwick Farm) site before being integrated into the broader IVE Group.
Last week IVE reported a 16% lift in revenue to $758.97 million for the year to June. Net profit after tax was up 66% to $33.1 million.
ACCC deputy chair Mick Keogh: “Despite the proposed acquisition combining the two largest providers of heatset web-offset printing in Australia, we reached the view that IVE was the only viable purchaser of Ovato, and that if this acquisition did not go ahead, the administrators would have to liquidate Ovato's assets.
“While in some cases the liquidation of assets can result in a more competitive outcome than a sale to a competitor, for example if those assets are purchased by potential competitors, in this case we concluded that Ovato's printing assets would be sold to overseas purchasers or sold for scrap. The ACCC considered there was not a real chance the heatset web offsest printing assets would continue to be operated by any other firm.
“The feedback we received from several customers was that while they were concerned that IVE would be their only option, they were more concerned with the impact on printing capacity if Ovato's assets were liquidated.
“Asset or business sales by administrators are subject to the same substantial lessening of competition test as any other transaction. As there was no real chance that Ovato or its assets would continue operating in the market without the proposed acquisition, we consider the proposed acquisition is unlikely to substantially lessen competition.”
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