Stralfors seals pounds 8m purchase of DPS

Transactional printer Stralfors UK has bought DPS Direct Mail in a pounds 8m deal, creating a pounds 28m turnover UK firm.

'We've been looking for a potential acquisition in the UK for a number of years,' said Stralfors UK managing director Mike Murphy, who will become group managing director. 'We've taken our time to find the perfect fit.'

The deal was signed last Tuesday (15 November), 13 months after Stralfors made initial contact.

DPS in Orpington, Kent will continue to trade under its name but it will be rebranded at some point in the future.

'It's a cliche, but we are now truly a total service provider,' said DPS technical director David Laybourne. 'With Stralfors continuous forms presses in Redruth, Cornwall we'll have a competitive edge, and from its point of view there's data processing and personalisation skills and equipment.'

DPS equity owners chairman Tony Hayday and finance director David Carter will leave the firm after a handover period. Fellow equity holder managing director Grant Bloomfield will continue at DPS, as will the rest of the management team.

'It's a win-win move for all of those involved,' said Bloomfield.

Hayday and Carter will continue to run sister firm, data processing software provider cygnus, which wasn't included as part of the sale.

Stralfors UK is part of the pounds 222m (SEK3.1bn) turnover Swedish communications group Stralfors, which has operations in 12 countries and employs 2,000 staff.

'The UK is the biggest single market in Europe (for DM and transactional mail) so we hope with this base we can compete for the big contracts and grow organically,' said Stralfors president and chief executive Per Samuelson.

The firm hasn't ruled further UK acquisitions once DPS has bedded in.

Analysis: Profile – DPS Direct Mail – Why a not so risky takeover promises greater opportunities in direct mail.
PrintWeek, p 23 12-08-2005

Stralfors UK's buy of data printer DPS should provide more chances for cross-selling, writes Darryl Danielli.

Hardly a week goes by without one print firm buying another. Such deals can easily crash, sometimes spectacularly because the two firms involved have little to offer each other; or because the bought operation is considered a 'bit of basket case'.

The recent pounds 8m purchase of DPS Direct Mail by Stralfors UK (PrintWeek, 24 November) can be pigeonholed as neither. The two firms fit together better than two bricks of Lego. Stralfors UK, based in Redruth in Cornwall, specialises in printing business forms and DPS the variable data that goes on them. Consider also that DPS is in rude health – posting an pounds 11m turnover with pre-tax profits of pounds 1.1m in 2004 – and it looks like a match made in heaven.

'With our respective client bases we have a remarkable opportunity to go out there and cross-sell,' says Stralfors UK managing director Mike Murphy, who will become UK group managing director.

DPS started out as print broker in 1992. In those days it traded from a 40m2 office in Croydon manned by founder and chairman Tony Hayday and two staff. The fledgling company then struck a partnership, now long ended, with a French firm, giving it the financial clout to build a balance sheet that meant potential landlords took it seriously. This, in turn, enabled it to move to premises that allowed it to bring direct mail production in-house.

'We haven't looked back since,' says Hayday, who along with finance director David Carter, another equity owner, effectively left the firm when the deal was signed with Stralfors on 15 November (although they will spend the next few weeks handing over).

It is the young management team Hayday recruited over the years that will take DPS into the future. Managing director Grant Bloomfield (who also had equity in the firm prior to the sale), technical director David Laybourne, client services director Toni Davey and data services director Martin Rides will head post-sale DPS. 'I have taken DPS as far as I wanted to – we are a strong medium-sized business. The next stage is where it gets serious and I'm not a corporate-minded person, but the team here are,' says Hayday.

DPS today operates from 4,700m2 split over three units in Orpington, Kent. It boasts a raft of ink-jet and laser personalisation and enclosing kit, as well as offering an impressive level of data-processing. Its client list is equally inspiring, with a raft of blue chips, including firms such as esure, John Lewis, Onetel and Vodafone. This made it an attractive proposition for the pounds 17m-turnover Stralfors UK, part of Swedish group Stralfors which has a turnover of pounds 222m (SEK3.1bn).

Another key driver for the deal was the rise of firms such as DSTi and Real Digital International, which are taking direct and transactional mail to the next level by combining the two.

'There has been no real innovation in the sector for the past 10 years. So investments like these are a fantastic fillip for the whole industry,' says Laybourne.

As well as being good news for the industry, Stralfors president and chief executive Per Samuelson sees it as a fantastic opportunity, one that his group is keeping a close eye on.

'In five years' time, I don't think there will be a clear difference between transactional mail and direct mail – the two will converge,' says Samuelson.

But there were other drivers too. 'DPS is a more recognised brand (here in the UK) than we are,' says Samuelson, which might seem strange when you consider that the Stralfors logo is on the back of every Lotto ticket (Camelot is the company's largest single customer).

The strength of the DPS brand has been built on investment driven by organic growth, and that will continue with even greater verve under the new ownership.

Taking opportunities

'Success comes to those that invest, and we will have funds to do so,' says Laybourne. That's not to say the firm has been given carte blanche to go out and spend for spending's sake.

'It's more about taking opportunities, so there will be a lot of discussion on how we can do things better,' says Samuelson.

That doesn't just mean spending on the latest kit. The group hasn't ruled out further UK acquisitions either, although it will follow the same methodical approach it took with the DPS deal.

'It's all about finding the perfect fit,' says Murphy.

But the plan right now is to grow both UK operations organically. The hope is that with the economies of scale (DPS and Stralfors have a combined turnover of pounds 28m and staff of 240) and combined service offering the firms will be able to pitch for even bigger contracts.

As Laybourne says: 'It's a great opportunity for DPS to get to the next level, grow our business, consolidate what we've got and really create something special.'

DPS FACTFILE
Established: 1992
Turnover: pounds 11m
Pre-tax profit: pounds 1.1m
Staff: 122
Clients: esure, John Lewis, Onetel and Vodafone
Services: laser and ink-jet printing; enclosing; data processing
600,000 records processed every day
80,000 A4 sheets personalised every hour
400,000 packs enclosed every day