There is a new big player in the reprographics world.
Paragon Group Ltd., a large, privately held print provider based in Dublin and serving the UK and Europe, announced in early July that it had become the controlling shareholder of Service Point Solutions (SPS). SPS had operated reprographics firms throughout Europe and the United States, but it ran into financial trouble last year and declared bankruptcy. (See below for links to past articles on this topic.)
The acquisition of SPS is Paragon’s first major foray into reprographics, and it immediately vaults the company into a major position. Paragon has acquired pieces of SPS since May, and the latest move means it controls SPS’s reprographics firms in the UK, Norway, Sweden, Belgium, the Netherlands, and Spain. The German SPS (Koebcke) was acquired by Mimeo.com in April, and the U.S. branches of SPS were acquired by another UK firm, The Color Company, in November 2013.
Paragon estimates the revenue from the SPS acquisition will be 110 million euros (about $150 million). Prior to the acquisition Paragon had 185 million euros revenue, so this acquisition is significant addition.
IRgA managing director Ed Avis separately interviewed Patrick Crean, CEO of Paragon Group, and Laurent Salmon, group finance director. These interviews were conducted via email, and they are reprinted verbatim below:
Interview with Patrick Crean, CEO of Paragon Group
Ed Avis: I see from your website that Paragon Group is involved in a wide range of communication products, but it appears that your acquisition of Service Point is your first foray into large-format imaging. Is that correct? Did you hope to enter that field prior to Service Point's problems, or did you become interested once Service Point became available?
Patrick Crean: We saw lots of attractive parts in the Service Point companies: the onsite facilities at clients, the digital print centres and the fantastic client list. Large format printing formed part of the mix and complements our capabilities particularly in the UK. It’s not our first foray, we have some large format experience and capabilities, mainly serving the French market to date, however Service Point will certainly help us accelerate our growth in the large format arena.
Avis: Do you envision keeping Service Point running as a separate company, or will it be incorporated into Paragon Group? In either case, what changes do you envision at Service Point?
Crean: The exact structure is being defined at the moment and for now Service Point is being run as a separate unit. While we can’t say the exact level of integration, what is certain is that we will be able to offer customers from both Paragon and Service Point an enhanced and unrivalled range of services.The biggest immediate change for Service Point is the backing of a financially strong, committed parent company, giving staff the confidence to compete and giving customers reassurance for the future.
Avis: Am I correct in assuming you see strength in the large-format imaging market in UK and mainland Europe? Please tell me about that - what leads you to believe it will grow?
Crean: There has been growth in large format driven by new technologies and trends, for example in the décor market. We see this strength continuing, while other areas such as AEC reprographics will decline.
Avis: What will Paragon do to succeed in this market that the competition is not doing? Do you envision expanding? Do you plan to expand in the U.S.?
Crean: Our strength is in the breadth of capabilities that we have as an organization. Our large format supports our cross-media offer and is part of a wide range of marketing services that includes direct mail, email and SMS marketing and sits along with a strong document management offer. We are also different from the competition because we have a growing network of digital hubs across Europe.
Avis: Please tell me a little about the history of Paragon.
Crean: The Paragon name goes back to the 1880s when the Lamson Paragon company was founded in London. It specialized in security printing, an area where Paragon still excels. It became part of the Moore group in the 1950s and remained so until the 1990s when it came into present ownership.
Interview with Laurent Salmon, Group Finance Director, Paragon
Avis: Large-format imaging appears to be a new field for Paragon. Do they have plans to expand in that area beyond their investment in Service Point?
Salmon: Yes, it is part of our global marketing and design offer.
Avis: The press release regarding Paragon and Service Point contains this sentence: "SPS’s accounts will reflect a much healthier company, with no structural debt, albeit smaller in size." Can you clarify that? How will SPS be made smaller? Will certain offices be closed? If so, which ones? How many employees will be affected?
Salmon: The SPS trade purchased by Paragon will be as high as €110m (from €149m previously, pre-administration). Paragon has not acquired the German trade from the Administrator (€7m turnover) or the US trade that had already been terminated by the Administrator in the USA. The SPS sales have naturally been impacted during the Administration process but Paragon is confident that it will be able to regain the trade lost experienced during this process. The Paragon offering is very large, very attractive to the customers and capable of delivering a more sophisticated technological offers that what SPS was capable of offering previously. Within the SPS trade that will be retained by Paragon (UK, Norway, Sweden, Belgium, Netherland and Spain), only a small number of offices and employees will be affected as it is Paragon's intention to grow the business with the support of the existing Paragon offer. In addition to the commercial synergies that one can expect from an industrial player such as Paragon, the SP business will benefit from a much wider trade offering covering document & marketing solutions as well as access control and traceability technologies. The number of Service Point employees joining Paragon is as high as 1100 people.
Avis: What plans does Paragon have to integrate Service Point's services into its own business? Will Paragon locations begin offering large-format services, for example?
Salmon: Paragon already had large format services within its offer but was sub-contracting lots of it externally. It will now be able to manufacture it internally.
Avis: Will Service Point retain its name and overall identity, or will it be fully integrated into Paragon? Will it retain a separate headquarters?
Salmon: Service Point will retain its name and identity as it is a very well known and recognized brand on the market. Service Point has always delivered state of the art services to customers, despite the recent financial difficulties relating to the unsustainable level of indebtedness created by the prior corporate management teams. Now that Paragon has resolved the Service Point debt level issue, the business can go back to its fantastic trading capacity, enriched by the technological Paragon market and industrial offering. The Barcelona headquarters will be retained and Paragon, as the main shareholder, intends to ask the CNMV (Spanish Stock Exchange Controller-Regulator) to have the SPS Plc trade again on the Madrid stock exchange before year-end.
To read industry observer Joel Salus’ keen insights into the Paragon acquisition of SPS, click the following link, and also use the search function on his blog to read other entries about the situation: http://reprographics.blogspot.com/2014/07/paragon-group-becomes-largest.html
To read the press release about Paragon’s acquisition of SPS, click here: https://docs.google.com/file/d/0B81al4kFAU9JQ3d5WDE2NXoybUk/edit
To read the press release about Paragon’s acquisition of SPS’s UK assets in May, click here: https://docs.google.com/file/d/0B81al4kFAU9JeThqcXJfd2NVaHM/edit
To read Paragon’s LinkedIn page, which describes the business, click here: https://www.linkedin.com/company/paragon-group-ltd
To view Paragon’s home page, click here: http://www.paragon-europe.com/
To read past IRgA Today articles about Service Point Solutions: