Leading mass customization company Cimpress N.V. CMPR continued its acquisition spree as it inked a definitive agreement to acquire German web-to-print business WIRmachenDRUCK GmbH. The deal is in sync with its attempts to expand its operations and build a mass customization platform (“MCP”) that optimizes production and supply chain of its products.
The transaction, valued at about €140 million ($152.3 million) net of any cash acquired, is expected to conclude in the third fiscal quarter of 2016 (which ends March 31, 2016), subject to antitrust approvals and customary closing conditions.
The consideration includes a cash payment of €132 million ($143.6 million), payable upon the close of the transaction, and €8 million ($8.7 million) in Cimpress shares. The terms of the deal also include a potential earn-out of up to €40 million ($43.5 million) payable in early 2018, subject to the attainment of certain financial performance targets in 2016 and 2017.
WIRmachenDRUCK serves small and medium businesses, graphic arts professionals and local printers through an e-commerce “upload and print” model. It has remarkable internet-based capabilities that cumulate and route huge numbers of small orders to a network of specialized production partners. Their outsourced supply chain model enables them to be highly competitive, and Cimpress plans to leverage these capabilities further by assimilating them into its mass customization platform.
Also, WIRmachenDRUCK will benefit from this deal as it leverages Cimpress’ scale and mass customization platform.
The upload and print business model offers customers a striking value proposition of convenience and economical prices. Cimpress has already spent over €300 million ($326.4 million) on buying “upload and print” companies, before this transaction, with the acquired companies showing impressive double-digit year-over-year organic growth (at constant currency rates). Thus, this latest acquisition complements Cimpress’ similar investments and is a great strategic fit.
Cimpress expects this latest acquisition to be accretive to revenues and adjusted EBITDA in fiscal 2016.
Earlier this year, Cimpress decided to acquire Austrian web-to-print business Druck.at, strengthening its foothold in the Austrian market. It also acquired Exagroup SAS, an established web-to-print business in Europe, to leverage Exagroup’s product scale and sophisticated network of outsourcing partners.
Cimpress, formerly known as Vistaprint, recently changed its corporate name to distinguish and reposition its brand identity. The company boasts an impressive portfolio of customer-centric brands like Vistaprint, Drukwerkdeal, Albelli and Pixartprinting.
Cimpress currently sports a Zacks Rank #1 (Strong Buy). Other stocks in the business services sector that look promising include Hudson Global, Inc HSON, ServiceMaster Global Holdings, Inc. SERV and Rentrak Corporation RENT, all carrying the same rank as Cimpress.
Note: €1= $1.0880
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