Fujifilm to Acquire Salmat’s BPO Business for A375m, 7.6 * underlying EBITDA

27th Aug 2012. Tokyo’s Fujifilm Holdings Corporation has announced that it signed a definitive agreement with Australia’s Salmat Limited (ASX:SLM) to acquire Salmat’s Business Process Outsourcing (BPO) division.

The acquisition, worth A$375 million, covers all the shares of Salmat’s wholly-owned subsidiary Salmat Document Management Solutions (SDMS), SDMS’s 11 subsidiaries, as well as Salmat Asia Limited (SAL), SDMS’s Asian business unit.

SDMS, its subsidiaries and SAL together had consolidated sales and underlying EBITA were A$316 million and A$49.5 million respectively for the June 2012 term. Net assets were A$305 million. The division comprised almost 40% of Salmat’s 2012 full-year turnover of A$823 million and 60% of its EBITA of AU$80.6 million. Overall, revenue was 4.6% down year on year, with the lower numbers mainly its contact centres division.

The transaction is subject to Foreign Investment Review Board approval and completion conditions and is expected to be completed by mid-October 2012.

The bid for Salmat follows a similar announcement from fellow listed print and communications giant PMP, which announced the takeover offer on 27 April, with the bidder revealed as labels and ticketing organisation TMA Group on 21 May.

One of Salmat’s major competitors, SEMA, filed for voluntary administration on 17 May.

The BPO business includes printing/delivering important postal matters including electricity/gas/water/communications invoices and bank account statements to end users, digitalizing and automatic processing of corporate clients’ invoicing work to reduce costs, delivering information by email, as well as compiling a database of scanned paper documents and their management/storage.

The strong performance at the BPO division was driven by rising volumes across print and online. In the first half, mail pack impressions rose 11.2% to 1.89 billion, mail pack volumes rose 6.1% to 539 million and e-documents were up 13.6% to 50 million.

Positioning the document solutions business as one of its key growth areas, Fujifilm Holdings is strongly promoting the business shift from the hardware-centric business offering multifunction devices and printers to the solutions and services business.

The acquisition of SDMS provides Fujifilm with the biggest capability to offer BPO services in Australia. Integrating SDMS’s know-how in BPO with Fujifilm Group’s powerful marketing capacity — sales performance, brand strength and customer base, the company will expand its solutions and services in China and other Asian markets.

Further, by introducing its print devices including the next-generation inkjet printer Jet Press series in work processes, it aims for business growth and expansion beyond what the current business trend affords.

The sale transaction follows Salmat’s announcement on 30 May 2012 that it had received an unsolicited approach regarding the possible acquisition of its BPO division. Following the approach, the Board received considerable interest from a range of parties, culminating in the transaction announced today.

The divestment simplifies and focuses Salmat’s group strategy.The Board will now consider options to further drive shareholder value, accelerate the growth strategy by building our scale and capability in the digital services and communications market, review the appropriate business and cost structure and deleverage the balance sheet.

The divestment to Fujifilm Holdings has also created growth opportunities for Salmat, as the two companies are now seeking to establish a broader working relationship that will leverage our respective geographies and services. For Salmat, this is a potential opportunity to drive growth by bringing our customer communication services and solutions into the Asian market with a highly credible partner.

A transitional services agreement has been entered into by Salmat and Fujifilm Holdings for a period of up to 18 months, to ensure that clients of BPO continue to receive excellent service in their essential mail communication.

“This is a great result for Salmat and the BPO division, which would not have been possible without the strong profit growth recorded as a result of the successful implementation of strategic initiatives and cost disciplines put in place by our team. Successful strategy execution, coupled with targeted investment in recent years, has paid dividends and underpins the excellent outcome for shareholders that today’s sale represents. I commend the excellent work of everyone at BPO.” said Chief Executive Officer Grant Harrod.

“We have taken the business a long way in recent years, but we also recognise that the next stage of BPO’s development is better suited to an owner with global reach and broader outsourcing ambition. I am very confident that we received good value for the business, but also that BPO will be a valuable asset to Fujifilm Holdings. This is a good result for both parties and the strategic partnership that will form as a result of this transaction will lead to greater value creation for all shareholders.”

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