“ Diamond “ under a pressIn the middle of January it has been declared preparation of the largest transaction in the market of polygraphic services - the company “ Diamond - a press “ it is exposed on sale for $40 million Experts believe that the moment for sale is chosen not the most successful from the point of view of the seller. But rather successful for the buyer.
Joint-Stock Company “ Diamond - the Press “ it is registered on December, 24th, 1997 with an authorised capital stock $600 thousand 35 % of actions belonged to Joint-Stock Company “ Rasters “ 65 % - GUPVO “ Almazjuvelireksport “ and affilirovannym to the companies. For today “ Diamond - the Press “ - the unique company in Russia, stably providing quality press in the big circulations (from 50 000 copies). Production Principal views - magazines, catalogues, advertising - commercial production. The sales volume in 2002 has made about $40 million (in 2001 - $35,5 million). Clients - Cosmopolitan, Harper ` s Bazaar, Men ` s Health, PC Magazine, PC Week, Metro Cash & Carry, Penthouse, “ the Spark “ “ the Power “ etc. “ Diamond - the Press “ - the service provider of Presidential Administration of the Russian Federation.
the Idea of sale of the company was meant even at its creation. We will remind, it was time of high inflation and bank instability, in the market there was many spare cash which were more favourable for putting in working manufacture, than to hold in bank. On the other hand, the Russian exporters have been obliged to return and place a currency gain in Russia. One of exporters, GUPVO “ Almazjuvelireksport “ already having large packages of state credit obligations and other papers, had no objection to place means in not profile business. So there was a cooperation from Joint-Stock Company “ Rasters “ already working in the market of advertising polygraphy.
it was at that time clear that it is time to adjust polygraphy in Russia. The western printers opposed to it: thanks to acceptance in 1995 “ the Law on state support of mass-media “ (it released the Russian publishers from VAT and customs duties payment on ready polygraphic production) almost all manufacture of qualitative printed matter has moved abroad, mainly to Finland.
However privileges for publishers operated till January, 1st, 1998. And after their cancellation, by calculations of shareholders, the modern polygraphic complex in territory of Russia should get competitive advantages before foreign printing houses at the expense of reduction of terms of manufacture, low costs on transportation and possibilities of operative quality assurance of production. Further, having increased company capitalisation, it was planned to sell it.
And here this moment has come. However, not absolutely at will of co-owners. Simply in September, 2002 the government has instructed, that all unitary enterprises have got rid of not profile actives, and “ Almazjuvelireksport “ should sell the actions. Private shareholders too should sell the actions - for the purpose of preservation of their liquidity.
Now, looking back at the passed way, the general director “ Diamond - a press “ Marina Pereverzev ascertains that for some reasons growth of capitalisation of the company “ Diamond - a press “ has not reached the planned indicators.
Nevertheless (or for this reason) the company is delicious object of purchase - in view of the nedootsenennosti, high cost of the actives, an in the lead position in the market and favorable prospects of development.
How to consider diamonds in a stone cave
Backlog “ Diamond - a press “ From the planned indicators speaks a number of factors. In - the first, at the moment of loading of the equipment from Germany the default has burst. Comments izlishni.
In - the second, the State Duma has given a surprise: on December, 28th, 1998 the law on state support of mass-media has been prolonged for three years. As a result the cost price of services “ Diamond - a press “ it has appeared above, than at the western printing houses, approximately on 39 % (15 % - the customs duties on import of the equipment, a paper and expendable materials on which 20 % of the VAT are imposed). Thereof - profitability decrease. To keep competitiveness, has been decided to take high quality, having occupied a niche in expensive segment of polygraphic services.
In the beginning of 2000 shareholders have reduced balance, and GUPVO has decided to leave business. In March of the same year to one western strategic investor have suggested to redeem actions GUPa. But it has appeared to show good prospects of development, additional investments are necessary. By then “ Diamond - a press “ already owned a new industrial platform in an industrial zone of Ochakovo the area of 21 thousand in sq. m. to load Ochakovo, it was required to buy two role cars and the sheet car - total cost about 20 million euro.
In April, 2000 the report on intentions with the potential investor, according to which " has been signed; the strategist “ redeemed 50 % of actions of Joint-Stock Company. But for two weeks before contract signing there was a new unexpectedness - in GUPe the general director was replaced. Actions GUPa have been transferred in trust management. The transaction has broken.
there was simultaneously other event - MPTR has changed an order of granting of the inquiries confirming the right of printing houses on reception of privileges on customs payments. And if earlier, according to Marina Pereverzevoj, “ Diamond - a press “ Still it was possible to import the equipment, a paper and expendable materials on favourable terms now the company had to pay monthly in addition on $200 thousand customs duties and on 250 thousand VAT (at a monthly average gain in $2,5 million). To load Ochakovo, have decided to buy the old car. The loading increase has allowed to lift a gain 2001 prior to $35 million, and in 2002 - to $40 million
In the beginning of 2002 “ Almazjuvelireksport “ has returned to management of the actions. Then - that also has been decided to finish investments and to prepare the company for sale. In September, 2002 the role equipment and the sheet car began to arrive. The first role car is started, the second will earn in March.
the Autumn of last year had been booked audit under the international standards. At the company accounts payable more than $30 million Is also good news: since December, 2001 of publishing house became obliged to pay to VAT printing houses. Is zabalansovye requirements to the budget on customs payments - on $5 million Loading of new cars, according to Marina Pereverzevoj, should provide the companies a gain at a rate of more $70 million already in 2003 - m at operational profitability (EBITDA) about 25 %.
It is necessary to tell, for any other kind of business the similar forecast of growth of a gain looks a little improbably: it will be difficult to investor to believe that for a year it is possible to increase a gain twice. However financial advisers from Open Society “ VEO - Opening “ (it is entrusted to this company to prepare the transaction) assert that in this case the forecast is absolutely real. That capacities in Ochakovo will be loaded, tell market tendencies. In - the first, it is a question of the company occupying unique position in the market in sense of quality, level of technologies, popularity and absence of competitors (by the way, Marina Pereverzev considers absence of a competition more likely as a deterrent for development of the business).
In - the second, it is a question of a unique market situation when production is made outside of that country in which extends. It cannot long proceed, and demand on importozameshchenie still for a long time will not be satisfied. All volume of the market in a segment glossy (the high-quality press on melovannoj to a paper in the big circulations) is estimated today in $400 million (together with the editions printed abroad). A share “ Diamond - a press “ in this market it is estimated approximately in 10 %, and with an exit of Ochakovo on a total power will make 20 - 22 %. And at this segment the big tendencies of growth - according to Marina Pereverzevoj, a minimum of 20 % in a year. It proves to be true activization former and occurrence of new players: after Burda this year on the Russian market there are German publishing houses Axel Schpringer and Bauer - verlag, the exit of the licence edition of magazine National Geographis is planned.
growth of the advertising market (on 40 % in 2002) is simultaneously observed that involves increase on the average on 20 % of volume of glossy magazines. All it occurs against growth of purchasing capacity of the population and development of distribution networks.
“ Confidential and investment bank “ advising management “ Diamond - a press “ has estimated shares of company in $40 million Cost paid off proceeding from three parametres: the pure discounted financial streams on 2003 - 2005, costs of a net wealth for September, 2002 (without a budget debt receivable on customs payments and the VAT) and the analysis of comparative transactions.
It is characteristic that interest in sellers is caused first of all by direct financial investors. According to Marina Pereverzevoj, now not time to sell a controlling stock to the strategic investor is it is necessary to do on capitalisation peak. In three years company cost even without additional investments will increase twice. If to enclose in addition $6 - 8 million the annual gain will reach $125 - 150 million and then will already involve sense “ the strategist “.
Though “ VEO - Opening “ sells all of 100 % of actions, the management representing one of private shareholders, intend to participate in the repayment of a part of actions (26 - 35 % depending on the price). In this case from the new partner guarantees of protection of the rights minoritariev (maintenance of liquidity of actions be required, to a guarantee from washing out of minority packages and so forth).