ACCC approves acquisition of Ovato by Retail Printer IVE
The Australian Competition & Consumer Commission (ACCC) has announced that it will not oppose the proposed acquisition of Ovato by IVE.
Both IVE and Ovato Limited are Australian print services companies and are responsible for printing catalogs for retailers, such as JB Hi-Fi and Spotlight.
Ovato has been in voluntary administration since the 21st from July 2022.
IVE is looking to acquire rival Ovato for $16 million. Only the Ovato WA site will remain operational, while the Geebung, QLD and Warwick Farm NSW factories will close.
The ACCC investigated whether Ovato qualified as a “failing company,” in which it would be required to liquidate its assets and exit the market if the acquisition did not go through.
While the competition watchdog would generally be wary of “the combination of Australia’s two largest providers of heatset web offset printing”, it concluded, under their merger guidelines, that “IVE was the only viable purchaser of Ovato, and that if this acquisition did not proceed, the administrators would have to liquidate the assets of Ovato.
ACCC Deputy Chairman Mick Keogh went on to say that “although in some cases the liquidation of assets may result in a more competitive outcome than a sale to a competitor, for example if those assets are purchased by potential competitors, in which case we concluded that the printing assets would be sold to foreign buyers or sold for scrap. The ACCC found that there was no real chance that the printing assets would heatset web offset printing continue to be operated by another company”,
“Comments we received from several customers were that while they were concerned that IVE was their only option, they were more concerned about the impact on print capacity if Ovato’s assets were liquidated,”
“Sales of assets or businesses by directors are subject to the same substantial lessening of competition test as any other transaction. As there was no real chance that Ovato or its assets would continue to operate in the without the proposed acquisition, we believe that the proposed acquisition should not materially lessen competition.
The ACCC had previously announced in June that it would also not oppose Opus Group’s acquisition of Ovato’s book printing business.