PAC sells plastic card division to US firm

Sunday Business Post - Done Deal Page - 10 Aug 2008

Prime Active Capital (PAC) has agreed a €13.9 million deal to sell its plastic card division to US company CPI Card Group.

The agreement will see the transfer of PAC subsidiaries, Plastic Card Company and PCC Services, to CPI ownership.

Together, both operations comprise the plastic cards design, production and distribution division of PAC’s Digimedia business.

CPI has agreed to take on existing debts for both operations, resulting in a net sale price of €11.3 million after advisers’ costs, taxes and transaction fees.

PAC chief executive Peter Lynch said the deal was the logical next step in the development of the company’s card production business.

‘‘In order for PCC to grow it would need to move factory, invest in new machinery, get new products and go after new customers such as Visa or Amex,” said Lynch. ‘‘In order to qualify to provide that kind of product you really have to have superb security and facilities and we would have to start again.”


The disposal of its plastic cards units will allow PAC to focus on other areas of its business, Lynch said.

‘‘We decided to sell out in order to change out the business into other areas where we thought we could get value and growth,” he said. ‘‘Once we decided to sell, it was a question of finding the best buyer.”

The sale is subject to shareholder approval, with a confirmation vote scheduled for PAC’s agm on August 28.

PAC’s three directors - executive chairman Peter Lynch, John Doris and Anne Keogh - are all in favour of the deal.

‘‘It is selling at eight times profit before tax, which is ten or eleven times profit after tax,” Lynch said. ‘‘That has to be regarded as a pretty good price.”

PAC’s other businesses include book, journal and on-demand digital printing unit PAC Digimedia and telecommunications division PAC Telemedia, which owns a majority stake in US-based mobile phone retail chain Cellular Centre LLC. PAC also holds a 21.5 per cent share in Media Square, a marketing services group based in Britain.

PAC developed out of printing group Oakhill, led by Ray McLoughlin. Lynch took over as chief executive of PAC in April of last year. The company subsequently relaunched as a buy-out investment vehicle.

‘‘We have experience of investment, and we have experience of running businesses through a private equity situation,” said Lynch.

‘‘We are a hybrid between a management company and a private equity situation. We raised approximately €15 million last year and we have invested most of that in Media Square and Cellular Centre.”

PAC’s group of companies turned over a total of €34.6million in 2007, including €21.4 million from the PAC companies sold to CPI.

Lynch said he expected PAC’s US operations to grow significantly over the next few years. ‘‘The Cellular Centre business has gone from turning over nothing last year to turning over just short of a million dollars a month,” he said. ‘‘It is in a growth phase in a colossal market and we expect it to get up to around $20 million next year.”