Spicers is buying rival merchant Direct Paper as part of its strategy to move into new areas, with the deal giving it an increased presence in packaging papers and boards.
The O’Neill brothers, Dale and Todd, will be taking senior roles in the business and are keen to be a part of its success into the future.
The move brings the second and third biggest merchants in the country together, although still some way behind number one Ball and Doggett, and will result in all 50 Direct staff joining the new operation. Spicers revenue for the last financial year reached $384m.
Speaking to PKN David Martin, CEO of Spicers, said, “Welcoming Direct to the Spicers business gives us access to new markets. There is some overlap, but in the main we operate in different sectors. Spicers is delighted to be able to welcome the Direct Paper business on board, and we know our customers will benefit.
"Delivering more value to the paper and packaging segment remains a key focus for Spicers. The combination of the Spicers and Direct Paper businesses will enable us to broaden our offer together and continue to deliver on our promises, to our customers and our suppliers, every day.
“Spicers saw the acquisition as a route to expand our market and bring on board new expertise. It is a win-win.”
Martin said the deal will also be beneficial to local printers in terms of better supply. In June Spicers became part of Kokusai Pulp and Paper (KPP), a giant Japanese paper trading operation.
O'Neill said the opportunity to partner with a global company was irresistible, saying, “It gives us backing, and it gives us the opportunity to grow. This move will solidify the business going forward, and present great new opportunities for all stakeholders in the business. Spicers having committed to a long term lease for our Dingley site also means no interruptions in supply to our customers, as we both focus on excellent service, together."
The deal is subject to ACCC clearance, and is expected to take about 12 weeks to go through. Both companies will continue to operate indepedently until then.
Direct Paper was established in 1996. It trades in the eastern states, with sites in Melbourne, Sydney, and Brisbane, which will continue to operate. No decision has been made on the Direct brand yet, Martin saying, “We will work through that in due course.”
In addition to commercial paper, Spicers is already a major player in the wide format market, with hardware, media and consumables contributing $79.3m to its revenue last year. It is also moving into supplying media for other areas such as interior design, window tinting, and architectural projects.