The $6bn Japan Pulp & Paper (JP) business is buying a controlling stake in what will be Australia’s biggest paper merchant with BJ Ball and KW Doggett merging.
JP is spending $75m for a 51 per cent stake, with the option to buy the remaining 49 per cent in two to three years time.
The paper giant is buying what will be a merged business, with BJ Ball AU acquiring KW Doggett, as well as BJ Ball NZ.
Under the deal BJ Ball AU will acquire 100 per cent of KW Doggett and BJ Ball NZ. Following the acquisition JP a 51 per cent stake in the new company, PagePack AU. This company will own 100 per cent of BJ Ball AU, BJ Ball NZ and KW Doggett.
Other shareholders include PagePack NZ – the current owner of BJ Ball – with 29 per cent, wuith KW Doggett owners KW Doggett Properties having 16.2 per cent, and Ken Ardcowan Pty owning 2.8 per cent.
The whole deal is subject to ACCC approval, with JP expecting a decision by July.
Details of management of the new entity, and any likely consolidation of warehousing and distribution have not been released. However the Doggett family will remain actively involved, apart from the founders, brothers Ken and John who will retire.
The new business will become the biggest merchant in the Australian market, overtaking Spicers, which had revenue from Australia in the 2016 financial year of $209m. BJ Ball Australia had sales of $287m in the 2016 financial year, while KW Doggett sales were $162m. Between them the two merchants had $449m in sales. BJ Ball is already the biggest merchant in New Zealand with sales of NZ$202m in 2016.
Buyer JPP was established in 1845, it has 3100 staff operating in 22 countries, and has an income of ¥506bn (A$6.1bn). It is both a merchant and a paper manufacturer. It is a publicly listed company on the Nikkei, with banks, paper businesses and pension funds its major shareholders. It paid almost $1bn to buy Carter Holt Harvey’s pulp and paper manufacturing arm from New Zealand’s only billionaire Graham Hart three years ago.
KW Doggett is owned by the Doggetts. Starting in the 1970s, the second generation is now running the operation with Simon Doggett as managing director. Beginning as a fine paper merchant Doggett has expanded into packaging, wide format and digital papers in recent years.
BJ Ball is owned by a New Zealand private equity fund, and incorporates the old CPI business, with Craig Brown as CEO. BJ Ball came into the Australian market in 2011 when p/e owner Maui Capital bought the struggling CPI, along with Raleigh Paper and Focus Paper. Brown became CEO in the same year, and since then has expanded the business into new markets including wide format and digital papers, acquiring half a dozen business along the way.
Craig Brown says, “BJ Ball has always strived to be a diversified and progressive supply partner to the graphic communications market. Joining forces with KW Doggett Fine Paper and JP has been carefully considered and we have no doubt this next step will future-proof our position while also being supportive of the industry long-term.”
“Through pooling our resources and accessing JP’s global network, we will create a more robust and resourced business. We believe this will add value for customers on both sides of the Tasman.”
“With the print market changing globally, this new entity is structured to meet the future head-on. Through combining two strong businesses and adding a heavyweight global partner, our business will have enhanced buying power, better access to new product categories, continuity of supply and a business model which is sustainable long term (both for suppliers and staff).”
The merger will see the Doggett family remain actively involved in growing and shaping the new business but will allow founders Ken and John Doggett to retire from day to day activity. Simon Doggett says “The coming together of three industry aligned stakeholders means we can fast track diversification, improve customer value and bring our ‘way of doing business’ to a much bigger platform. High levels of customer service and providing staff with a great place to work are a key focus for the new entity."
Akihiko Watanabe, President, JP says “the Australasian market has long been attractive to JP. The opportunity to enter this market with such a strongly-aligned partner enables us to leverage significant existing relationships and introduce more diverse products here. We look forward to the ongoing benefit this will bring to the market and customers and becoming a long term partner to the ANZ market."