Xerox Relinquishes it’s European Paper Business to Merchant

On June 19, 2013, Antalis, the leading European paper merchant, announced a binding offer to acquire Xerox’s paper and print media products business in Western Europe covering the major 16 countries. This follows shortly on from the announcement in March, this year, that US paper mill Domtar was to purchase Xerox’ North American paper business. This deal has now successfully completed. Whilst the announcement for Europe was perhaps inevitable following the North American acquisition in March this year, it had been suggested to Infotrends, by European Xerox sources, that the two businesses were separate and that it was not expected to follow on imminently in Europe. From Xerox’ perspective this deal should, however, enable the company to move on and focus on being a provider of business document services and technologies, without the ins and outs of running a substrate distribution company, and this is its intention.

According to Infotrend’s recent analysis the cut size market in Western European countries has reached maturity and so a business such as Xerox’s would be striving to adapt its product range within the context of a declining market.

On the other hand Antalis, whose business is dedicated to substrate distribution, will adopt exclusively, a very well known brand in both the office and the professional print markets. Xerox’s range ( though not manufactured by Xerox itself) covers the spectrum of office papers from the basic ‘C’ grade office paper through to A++ super-calendered papers suited particularly well to production colour toner technology. In addition the range is highly fragmented with coated silks and gloss papers as well as recycled grades, carbonless forms , other specialist forms and labels used in a variety of applications.

The brand is renowned in Europe rating year in, year out, as the most recognized brand in the Opticom survey of 4500 office users and this was confirmed in a more recent Infotrends study focusing on production colour printing paper type. See http://www.infotrends.com/public/Content/Multiclients/substrateoppts2012.html

Antalis itself believes the deal will enable the company to double its volume into these markets , bring new sales networks, strengthen and improve its financial position as well as bring new
skills into the group that should help to enhance efficiency and improve overall profitability. The European Xerox paper business represents a market volume of around 280,000 tonnes of paper worth in excess of Euros 300 million.

The reason(s) why Xerox has decided to sell off its established paper businesses still remains unclear but we believe that it is most likely that Xerox concluded that further growth in market share was unlikely, and that its bottom-line return would be sustained or even improved by shifting all the sales and distribution costs to an established channel player while retaining a
volume-based licensing or royalty fee. The financial aspects of the deal are however, as yet undisclosed and will likely remain so at least until the deal in Europe is sealed. The acquisition, which is subject to EU approval and employee consultation, is expected to be confirmed in the 4th quarter of 2013. Antalis is owned by global paper supplier Sequana that also owns the European paper mill Arjo Wiggins.

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