The UK print and publishing company, St Ives, have sold their web (magazine printing) division for £20 million to the private equity firm, Walstead Investments. The division is responsible for producing major titles such as the Economist and Time Out, and its capture represents a huge leap forward in terms of market share for Walstead Investments who already own the Wyndeham Group, another large UK print manufacturing company.

So what is it that has prompted such polarised moves? Two companies from similar backgrounds, both subject to the same market developments, but while one aggressively swallows market share to consolidate its position as a traditional manufacturer, the other makes a rapid shift towards a leaner, meaner service based operation.

Clearly an exchange of this magnitude indicates bold strategic measures for both parties, and one only has to take a glance at their respective websites to understand the logic. On the one hand Wyndeham refer to themselves as the “UK’s Print Powerhouse”, while conversely St Ives speak of providing “complex solutions and added value services”.

From St Ives point of view the motivations to let go were clear and compelling; the unforgiving market developments of the last few years had simply been too much to bear:

• a rapid move towards digital based consumption of media
• the over-supply of commodity print that left price as the primary differentiator
• significantly reduced advertising spend as it followed consumer behaviour across to the online realm

St Ives explained stating they have “continued to experience particularly tough conditions in the Magazine business’ markets in recent years, where excess capacity…. and the increasing trend of migration of advertising and content into digital formats…. has exerted significant downward price pressure, resulting in poor levels of profitability,”

The move conveys a desire to become a more nimble, service orientated version of their previous selves, free of the cast-iron printing press that’s been hanging around their ever weakening neck. CEO Patrick Martell said, “We have made another significant and positive change to the structure of the group …. and the proposed disposal of the loss-making Magazine printing business will further strengthen the group’s financial performance and will significantly reduce our exposure to over-supplied commoditised markets.”

So what about Walstead? This will be their fourth deal of this nature since entering the market in December 2008, having purchased Wyndeham Press Group, Southernprint and Apple Web. With the latest addition they are now the largest commercial weboffset printing business in the UK, producing 72 weekly and 712 monthly titles. Director Stephen Hargrave commented: “Someone had to make a move like this, no-one else was going to, and we’re glad we’re the ones to have done it. We’re totally focused on this market and determined to make a go of it.”

Naturally both companies are being extremely positive about their decisions, but for a more objective take one needs only review the market reaction; the news immediately shot St Ives shares up 9%, suggesting the broader audience approves of the decision to strengthen the balance sheet and refocus on higher margin areas, such as marketing and logistics.

As for Walstead, well you have to admire their determined attempt to consolidate their position as turnaround specialists in an ever shrinking market, but one can’t help but sense the smart money has already spoken.