Managers `buy-in' grouping talking to Adare

A management buy-in group is involved in detailed negotiations with Adare Printing for the acquisition of the flat sheet printing division of Adare's Mount Salus Press subsidiary.

Adare said yesterday that it intends to withdraw from this section of Mount Salus's operations from the middle of next month. Adare, however, is retaining Mount Salus's book publishing and educational printing operations which account for about half of the subsidiaryt's turnover.

The management buy-in group is headed by Mr Ian Shearer, former managing director of the Navanbe print and packaging group, and the Mount Salus managing director Mr Jim O'Connor. Mr Shearer declined to go into details on the MBI offer or its financial structure, but added that the group is "close to agreement" with Adare on the buy-in.

Mr Shearer warned, however, that a number of issues need to be addressed - particularly the cost structure at Mount Salus, which, he said, is "too high." Adare, in its statement, said that if the buy-in is successful, most of the 40 jobs involved could be secured.

Mr Shearer said that if the buy-in is successful, the new management would shift the emphasis of the business towards printing compact disc covers which he described as a "niche market". "With a slimmer, trimmer operation focused on that niche market, we would see a profitable future." He added that he hoped to have a buy-in completed by the time of Adare's withdrawal on September 15th.

In its statement, Adare said that the recent restructuring at Mount Salus had failed to make the company "capable of meeting the profitability criteria expected by the group". It added that the continuing downturn in the computer manual market meant that the flat sheet printing sector has encountered a squeeze on margins. "These trends are likely to intensify with further capacity coming on stream," the statement added.

For Adare, the £12 million acquisition of Mount Salus in May, 1995, has proved to be a nightmare. and the only beneficiaries of that particular deal seems to have been property developer Mr Mark Kavanagh, whose family interests owned Mount Salus. Adare paid the Kavanagh family £3.4 million for Mount Salus and assumed the print company's debts of £8.6 million.

A year later, however, Adare shares took a tumble when Mount Salus lost the contract for the printing of Microsoft manuals, a contract that was worth around £5 million in sales and around £600,000 in profits. The loss of the contract also resulted in the loss of 50 jobs.