Megapress, the third-largest player on the Romanian market of printing companies has been put up for sale by its shareholders, businessman Sorin Penes and investment fund SociAétAé GAénAérale Romania Fund (SGRF). Penes, who holds 65% in the company, says six investors have already shown interest in the business and that Megapress is worth approximately $18 million.
Roland Berger was hired as a consultant for finding a buyer and brokering the deal.
"We already have six investors interested and we are expecting the seventh to confirm, as well. We hope to get at least three firm bids and then proceed to negotiations. We have companies from Germany, Turkey, France, Greece and a foreign investment fund looking into this," Sorin Penes told Ziarul Financiar.
The sale of the company was largely prompted by the SGRF investment fund that entered Romania in 1997 and now has to find buyers for all its interests, as its life span is coming to an end. SGRF last year sold all its shares in Arctic Gaesti and Electroaparataj Bucharest.
SGRF bought into the Megapress business in 1999, following a $4m capital inflow. The fund holds 35% in the company.
"There's quite a lot of interest in Megapress, so we are hoping to get good exit terms in the end," said Razvan Cretu, investment manager of SociAétAé GAénAérale Asset Management, the firm administrating the fund. Sorin Penes says he will decide whether to sell all his shares or retain 15%-20% only when he sees all the offers.
"As far as I can tell, the most interested of them all is the foreign investment fund. Under the circumstances, I could keep 15%-20% and stay involved in the business," Penes says.
Megapress' majority shareholder says the company logged $11.5 million turnover last year, up from the $9 million in 2001, while operating income amounted to $1.2 million.
"The sales in a year are divided between the publishing house business (Megapress owns Aramis and Minerva publishing houses) - one third and the printing company - two thirds," Penes explains.
The magazine, newspaper and book printing market is estimated at some $45-$50 million a year, with Infopress, Imprimeriile Media Pro, Megapress, FED and Monitorul Oficial as the top players. The market is fragmented, though, as there are lots of smaller printing companies besides these five players.
The market has already seen a major transaction. Investment fund Baring Central Europe Fund took over 80% in Infopress in 2001, following a $5.8m capital increase. The increase brought along the ratification of a loan contract for $4.2 million investments signed with Banca Romana pentru Dezvoltare (Romanian Development Bank - BRD).
Dan Raceanu, Imprimeriile Media Pro CEO expects to see foreign capital working its way onto the magazine printing market over the next few years. At the same time, a consolidation by the M&A phenomenon is expected to occur. The high number of competitors makes many printing companies operate below capacity.
"The magazine and newspaper printing market has come at a standstill. The prices are very low due to the fierce competition. They are practically working for just enough to cover costs. This is why printing companies hardly have any money left to invest," Raceanu said.
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