PMP bid good news for shares

THE share price of PMP this week swung from a record low, prompted by a profit downgrade, to a six-month high after the struggling printing house announced it had received a takeover offer.

THE share price of PMP this week swung from a record low, prompted by a profit downgrade, to a six-month high after the struggling printing house announced it had received a takeover offer.

Chairman Ian Fraser yesterday told the stock exchange the board had received "a highly conditional non-binding indicative offer for the purchase of PMP in a range between 68? to 78?".

The offer values the company at up to $252 million, or triple the 25?-a-share low the company was trading at this week after announcing a substantial profit downgrade on Tuesday. PMP shares closed 37? higher at 62?.

Mr Fraser would not say whether it was a trade buyer or private equity or give any details of the structure of the offer, and industry figures were split on the likely identity of the bidder.

"The directors are considering the approach and will keep the market informed of developments," Mr Fraser said.

The printing sector has been struggling with over-capacity and the general advertising slowdown, and PMP this week warned it was facing "a combination of structural issues, economic drivers and deferral of advertising spend into the first quarter of fiscal 2013".

One source speculated the high price suggested an offshore industry buyer was more likely.

Peter Hall, chairman of one of PMP's largest shareholders, Hunter Hall, said the sector was ripe for consolidation and speculated that a new owner could use PMP to buy up other assets.

Five years ago, PMP rejected a $1.95 to $2.15-a-share bid from unidentified private equity firms.