Smiths News digests rival Dawson
Smiths News is to swallow up Dawson Holdings for £20m in a deal it hopes will boost its position in the eBook market.
Helping hand: Smiths hopes Dawson will provide an eBook platform for its own wholesaler Bertrams
The newspaper and magazine wholesaler will shell out 17.72p per share, a premium of 24% on Dawson's closing price yesterday.
Smiths, which was created in 2006 following its demerger from retailer WH Smith, said the deal would enhance earnings immediately.
It also expects to achieve annual cost savings of £3.8m by the end of its financial year ending August 2014.
Its shares are up 3.25p at 97.25p in trading today, while Dawson has put on 2.5p to 16.75p.
Smiths said Dawson's largest trading division - Dawson Books, which supplies to 80% of the country's universities - would provide an established eBook platform for its own book wholesaler Bertrams.
In addition, the acquisition of Dawson - which employs 408 staff - will help Smiths and its subsidiaries tap into new markets including universities and airlines.
Smiths is proposing to transfer a number of Dawson's staff to its own locations in Norwich, Swindon and Bradford and warned staff who do not transfer would be at risk of redundancy. The proposals will be subject to consultation and there will be no immediate changes.
Dawson can be traced back to the early 19th century and has three divisions - Dawson Books, Dawson Media Direct, which supplies newspapers and magazines to airlines, and Dawson Marketing Services.
It is best known for its newspaper and magazine distribution business, which it put into administration two years ago.
Dawson News lost millions of pounds worth of contracts from the likes of Trinity Mirror, News International, Telegraph Media Group and Daily Mail publisher Associated Newspapers.
The assets of Dawson News were snapped up by rivals including Smiths News and John Menzies for around £2m in 2009.
The remaining three divisions at Dawson will be sold to Smiths News subject to shareholder approval.
Hugh Cawley, Dawson chief executive, said: 'The offer follows the board's successful restructuring and turnaround plan, which first rescued the Dawson Group from the risk of administration and more recently returned the group to profit growth.'
Smiths has proposed combining Dawson Books and Bertrams at the latter's Norwich facility. This would see Dawson's Rushden, Northamptonshire, warehouse close and staff transfer to Norwich. Dawson Media Direct's financial support functions at Langley, Northamptonshire, will be transferred to Swindon or Bradford.
Dawson's head office at Epsom, Surrey, will be closed under Smiths' proposals.
Combining Dawson Books, which has a database of 16m titles, and Bertrams will increase Bertrams' revenues by 32%, Smiths said.
View from the City
'This deal looks positive and is enhancing to Smiths,' said Andy Murphy of broker Singer Capital Markets. 'However, we believe it could be the first of a number of deals as the total cost is £20m and we believe Smiths' 'war chest' is significantly larger.
'Dawson Group enhances Smiths' Bertrams Books business, adding a third to its scale, and enhancing the eBooks offering. Dawson Media Direct and Dawson Marketing Services adds two other profitable elements to the group.'
Most watched Money videos
- BMW meets Swarovski and releases BMW i7 Crystal Headlights Iconic Glow
- Mail Online takes a tour of Gatwick's modern EV charging station
- MailOnline asks Lexie Limitless 5 quick fire EV road trip questions
- Skoda reveals Skoda Epiq as part of an all-electric car portfolio
- BMW's Vision Neue Klasse X unveils its sports activity vehicle future
- How to invest for income and growth: SAINTS' James Dow
- 'Now even better': Nissan Qashqai gets a facelift for 2024 version
- Mercedes has finally unveiled its new electric G-Class
- Mini celebrates the release of brand new all-electric car Mini Aceman
- 2025 Aston Martin DBX707: More luxury but comes with a higher price
- Land Rover unveil newest all-electric Range Rover SUV
- Tesla unveils new Model 3 Performance - it's the fastest ever!
- Former Chancellor Nadhim Zahawi to chair Very Group
- MARKET REPORT: FTSE falters despite UBS call to buy...
- How reliable are the most popular used cars? Here's how...
- Taxpayer stake in NatWest falls below 27% as Treasury...
- Cerillion boosted by $11.1m contract with provider of...
- UK Government sells another chunk of NatWest shares
- Anglo strikes out alone - but can it survive a bid...
- Anglo American rejects rival BHP's £34bn second takeover bid
- Police not interested in shoplifting, says M&S as thefts...
- Diploma shares top FTSE 100 risers after firm raises...
- Phoenix Group finance chief to step down from insurer
- A MILLION more people have taken on mortgages they will...
- Used car marketplace Cazoo looking for buyers as it nears...
- Evri issues warning over huge rise in smishing scams -...
- US owner of Boots steps up efforts to find a buyer for...
- I repeatedly bail out my partner from his financial...
- BUSINESS LIVE: Nadhim Zahawi to chair The Very Group;...
- London's 'Mr Super Prime' to take centre stage in...