Vistaprint to Acquire Dutch Firm

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In a concerted effort to extend its geographical footprint, business services provider Vistaprint N.V. (VPRT) recently inked a definitive agreement to acquire privately-held printing and graphic product producer People & Print Group B.V. for an undisclosed amount. The transaction is likely to form a behemoth in its category with complementary product offerings, operating synergies and technological collaboration to serve a wide spectrum of customers across the globe.

The Acquiree

Based in Deventer, the Netherlands, People & Print Group offers a complete solution for printing and graphic related products through a personalized touch for a unique appeal. Its product portfolio comprises business cards, posters, photos on canvas and giant banners, which are largely produced in-house for a fast, flexible and cost-effective delivery. Since its inception as a novel concept in 2005, People & Print Group has evolved as one of the top players in the European printing market handling 1,600 orders on an average per day in 2013 with approximately 175 employees.

Focusing primarily on the Dutch and Belgian markets, People & Print Group has several online customer-friendly websites, including its most well-known site, Drukwerkdeal.nl. With a dedicated aftersales service, it boasts of a steady crop of repeat customers, including local printers, design agencies and resellers, as well as small businesses that have the ability to create and upload graphic design files.   

Key Takeaways

The combined entity has a complementary product portfolio that is likely to result in improved customer value proposition and profitability over time through economies of scale. The acquisition brings together two similar working cultures and extends the core customer group served by the respective companies. The deal particularly combines People & Print Group’s production innovation and customer relationship expertise with Vistaprint’s technology and manufacturing prowess to form an undisputed leader in the industry.

To start with, Vistaprint intends to operate the People & Print Group brands as an independent and focused subsidiary with a distinct value proposition and separate brand positioning. However, over the years, products from the respective brands are expected to be introduced to the other to extend the product offerings of the combined entity.

With People & Print Group on board, Vistaprint has an easy access to the Dutch and the Belgian markets. It also gains a solid foothold in the highly fragmented small business market with a devoted customer base and a diversified product portfolio of the People & Print Group. On the other hand, the merger enables People & Print Group to better serve its own customers by leveraging Vistaprint’s scale, financial strength, technology and manufacturing expertise.

Moving Forward

The acquisition is expected to close by the fourth quarter of fiscal 2014. People & Print Group workforce will join the Vistaprint team, but will continue to operate its own brands. The acquisition is expected to be neutral to Vistaprint’s fiscal 2014 earnings, although it is likely to come up with an updated guidance and commentary regarding the transaction sometime later.

Despite this strategic acquisition news, share prices of Vistaprint remained relatively flat and closed the trading session on Feb 18 at $50.98. However, we see a healthy growth potential for Vistaprint post integration.

Vistaprint currently sports a Zacks Rank #1 (Strong Buy). Besides Vistaprint, stocks that look promising and are worth considering for now include Broadridge Financial Solutions, Inc. (BR), Huron Consulting Group Inc. (HURN) and Paychex, Inc. (PAYX), each carrying a Zacks Rank #2 (Buy).

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Read the Full Research Report on PAYX
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