Street wise Adare buys Prontaprint

NOT so long ago the business of walk in "instant print" shops was largely confined to producing straightforward company mail shots and business cards. If the customer required more complex graphic design and an end product of high visual quality the business generally went to the more conventional printing house.

After all, one does not go to Burger King expecting a cordon bleu repast with fine wine. The evolution and refinement of new printing technologies has changed all that the once cheap but cheerful retail print shops now offer sophisticated graphic design and high quality printing. These walk in shops, with low overheads and competitive pricing, are securing some of the volume business which previously went to larger printing houses. So if you can't beat `em, why not buy into `em?

Publicly quoted Adare Printing has done just that. The fast expanding Irish printing group announced this week that it will pay £23 million sterling to acquire the British based Prontaprint instant print business, which operates a chain of 250 franchised outlets in Ireland and Britain, along with master franchises throughout the world. The deal, financed by borrowings, is the most ambitious in Adare's history, almost equal to the combined value of all its acquisitions over the past five years.

Profits at Prontaprint are on a rising curve, growing from £2.2 million in 1994 to just over £3 million in the 11 months to end February last.

The deal is expected to enhance earnings by 10 per cent in the next financial year. Adare, which paid £12 million for Mount Salus Press last year, is expected to nearly treble its profits to around £8.3 million in the current financial year, a growth rate largely reflecting the Mount Salus acquisition. Given this level of earnings Adare's interest payments on its borrowing are covered five times by operating profits, so the group is well capable of meeting its obligations to the consortium of lender banks.

Adare shares - a strong performer on the Irish market this year - rose to an all time high of 540p this week, before falling back to close the week at 520p.