ACCO has sold its GBC Australia business to mailroom solutions company Neopost.
GBC Australia – officially called GBC-Fordigraph – has been the exclusive distributor of Neopost products in Australia for almost 20 years and is a leading player in the market in the commercial document finishing and business mailing sectors.
Headquartered in Sydney, GBC Australia has branches in Melbourne, Brisbane and Canberra along with GBC authorised dealerships in South Australia, Western Australia, Northern Territory, Tasmania and in New Zealand.
Neopost has said that it intends to retain the existing management staff and employees of GBC Australia – about 175 people. It will be the exclusive direct sales channel distributor for select GBC print finishing products in Australia.
Last year, the business achieved a profit of around $4 million on sales of approximately $46 million.
ACCO said that the sale would have no impact on ACCO Australia or the company’s Pelikan Artline joint-venture, which are its two larger businesses servicing resale channels in Australia.
The sale price of GBC Australia was disclosed as $56.6 million, and ACCO has said that it is increasing its 2011 free cash flow target (after interest, taxes and capital expenditures) to $100-110 million, up from $50-60 million.
Adjusting for the impact of the sale, ACCO also reiterated its full-year sales and earnings guidance.
It said that it expects sales from continuing operations to increase between 2-4% (before the effects of foreign currency), and diluted earnings per share from continuing operations, excluding the gain on the GBC disposal, to grow between 20-30%.
For Neopost, the decision to establish a direct presence in Australia is part of its strategy to develop its activities in the Asia-Pacific region and follows the recent opening of a new regional head office in Singapore.
seems to me this sale is neither positive nor negative and simply gives ABD some more cash to alleviate debt burden payments and give them more cushion. They sold at 14x EBITDA which is below what ABD would like to trade at once it reverts back to more normal times. The bounce in share price is on low volume so not much to take away from that. The key for ABD will be to see if they can hold margin. With costs rapidly increasing in China and their main customers not being able to incur much if any cost increases the next 2 qrts will be very interesting. with the heavy debt burden, i am not sure ABD will come out ok.