IG Design Group swallows Aussie card firm Biscay

Designer and manufacturer of celebration, gifting, stationery and creative play products IG Design Group announced on Thursday that it has signed a contract to acquire the trade and certain assets of Biscay Greetings, which it described as a “leading” greetings card and paper products business based in Australia.

The AIM-traded firm said completion would take place on 8 January.

It said the acquisition, to be made through Design Group's Australian joint venture Artwrap, would be satisfied by a cash consideration of AUD 9m (£5.5m) using local debt facilities.

Stock and fixed assets acquired were estimated to have a market value of AUD 5.0m, with the balance of the consideration to be treated as intangible assets and goodwill.

The consideration represented 2.7x EBITDA for the year to 30 June 2017, although an injection of working capital of up to AUD 3m would also be required.

In the year to 30 June, Biscay generated sales of AUD 13.4m, with an operating profit before tax of AUD 2.9m.

The company said total transaction and restructuring costs were estimated to be AUD 0.6m, which would be treated as exceptional costs.

IG’s board said that, while of “negligible impact” to underlying earnings in the 2018 financial year due to the timing of completion, the acquisition would be earnings accretive from the next financial year.

“This acquisition complements Design Group's existing operations in Australia and will approximately double the group's already strong share in the value channel of the greetings card market there, providing cross selling opportunities and thus an even more compelling proposition to existing and new customers,” said IG Design Group chief executive Paul Fineman.

“It will add to our capabilities in this growing and higher margin category for Design Group as well as further diversifying the group geographically.”

Fineman said the company’s decision to pursue the acquisition followed a recently-announced record year for Design Group, which included a “significant” contract win in Australia.

“This is a further illustration of how we are delivering on our stated strategy, with carefully considered acquisitions across geography, channel or category, complementing the group's strong organic growth.”