Acquisition of Orbital Marketing Services

28 November 2012

John Menzies plc

Acquisition of Orbital Marketing Services

John Menzies plc is pleased to announce that it has reached agreement for Menzies Distribution, its newspaper and magazine wholesaling subsidiary, to acquire the entire issued share capital of Orbital Marketing Services Group Limited (Orbital). Orbital is 51% owned by BP Direct Mail Company Limited and 49% by Rydlings Limited, whose shareholders comprise the existing management team who will remain with the business.

Orbital comprises a portfolio of UK based logistics and marketing services businesses serving the travel, tourism, education, charity, publishing and healthcare sectors. The company was established in 1972 and it employs over 550 staff at 9 locations across the UK.

For the year to March 2012 Orbital reported an operating profit of £2.2m and gross assets of £13.5m. Like Menzies Distribution, Orbital is a cash generative business and the acquisition will be earnings enhancing in the year to 31 December 2013.

Total consideration for Orbital, which will be met in cash from existing banking facilities, amounts to £13.6m with £7.7m payable now and a further £5.9m payable on 31 December 2014. Further consideration, up to a maximum of £6.3m may be payable only if exceptionally high levels of profit performance were to be achieved by December 2014.

The acquisition of Orbital takes Menzies Distribution into new business sectors and adds further complementary services to its existing logistics and marketing services capabilities. The acquisition is highly synergistic. Given the respective infrastructure of both businesses there are significant network, operational and system synergies to be gained as part of the integration process in the medium term.

 Iain Napier, Chairman of John Menzies plc, said:

"I am delighted that Menzies Distribution has acquired Orbital. This acquisition allows us to expand our printed media distribution footprint whilst also taking a large stride into adjacent growth areas. The team are now focussed on integrating these new businesses and driving through the significant synergies that have been identified.

Orbital opens up new opportunities for us. The combined network will bring new reach to our logistical capabilities and allow us to expand some of Orbital's services into new areas.

It has been our strategy to invest within both operating divisions where sustainable earnings can be created. While the majority of the Group's expansion will continue to come from our industry leading Aviation services business, this acquisition allows Menzies Distribution to grow by enlarging its printed media distribution capabilities and opening up new markets with strong growth opportunities."

-Ends-

For further information contact:

Paul Dollman, Group Finance Director 0131 459 8018

John Geddes, Group Company Secretary 0131 459 8180

Jonathon Brill/ Alex Beagley, FTI Consulting 0207 831 3113

About Orbital Marketing Services Group

Orbital comprises three main business streams:

1. Travel marketing

Orbital provides an extensive array of services to and on behalf of the Travel Industry. The core business stream is travel brochure distribution. Currently the business distributes 98% of the travel brochure market to retail outlets throughout the UK. Other services include: bulk brochure distribution, data management, online services, telemarketing and e-broadcast campaigns, through to storage, fulfilment, shared and solus mailings.

Key customers include: TUI, Thomas Cook, Virgin and Kuoni.

2. Leaflet distribution

Through its subsidiary, Take One Media, Orbital provides a comprehensive range of leaflet display stands designed to ensure that their clients' literature is seen by the maximum number of potential visitors. The scale of the operation combined with their flexibility enables Orbital to tailor campaigns to the specific needs of the client, whether they are a small local attraction or a nationally recognised institution. 

With over 10,000 outlets (1,600 in the London area) serviced by a field based merchandising team, Orbital work with airport authorities, hotel chains and leisure attractions etc. to target overseas and UK visitors and residents on the move, where they live or when they arrive at their destination.

Key customers and locations include: Merlin Group, Network Rail, British Airports Authority, Travelodge and Premier Inn.

3. Fulfilment & Direct Mailing

Orbital specialises in fulfilment and direct mailing services. The fulfilment offering includes services such as data management and multi-channel ordering through mail, website and an inbound, PCI compliant call centre. Ordering systems are directly linked to the warehouse operation which fulfils products and promotional materials for despatch on demand. Clients range from e-commerce retailers to charities and a range of both free and paid for products are despatched to business and consumer audiences.

An integrated direct mail & print capability also exists which services various sectors including Charity, Education, Publishing and Healthcare.

Key customers include: Frontline, Harper Collins, The Children's Society and Guide Dogs for the Blind.