C'PRO has acquired France's second-largest print supplier in a deal that will propel its revenues past €600m.
The French VAR has bought Koden, a print supplier with 650 employees across 64 branches in France and annual revenues of €170m.
The reseller is Sharp's largest partner in Europe and France's number two print supplier after C'PRO. It claims to have 65,000 machines in service among its broad SMB customer base.
According to C'PRO's general director, Gilles Perrot, buying Koden will boost its revenues past the €600m mark and will cement the French firm as the largest multi-vendor print supplier in Europe.
The acquisition has yet to be cleared by competition regulators in France and is expected to close in late April or early May, according to Perrot.
How the deal crossed the line
Koden's sale to C'PRO follows seven months of negotiations, according to Perrot. Koden's owner, private equity firm Naxicap Partners, initially kick-started the sale process in July 2019 after a five-year stint with the print supplier.
C'PRO was engaged with Naxicap from the outset and batted off other interested buyers. In September, C'PRO began looking for financial backing to fund the acquisition.
Including syndicates, seven or eight banks were involved in securing the funds to acquire Koden, claims Perrot, with BNP Paribas among the three main lenders.
"We had to completely redesign our financial structure to achieve the deal, which was a bit unusual for us," said Perrot.
"We didn't want to open up C'PRO's capital to make this acquisition. We wanted to make it fully with debt, so this was a condition which made it a bit more difficult. If you have more capital, it is easier to make the deal, but we didn't want to be diluted to make the acquisition so of course it took us a bit more time."
Becoming Europe's print leader
C'PRO is no stranger to M&A. The firm makes around 10 acquisitions every year, but usually for small, regional print or IT businesses. It's part of an ambition to hit €1bn in revenues by 2025 and €500m by 2021, a target it will now obliterate through its Koden purchase.
Koden is C'PRO's largest acquisition to date. Its 650-strong employees and €170m turnover dwarfs C'PRO's second-largest acquisition, of IT reseller Quadria in 2018 - a business with €120m revenues and 350 people.
The Quadria acquisition was a big test for C'PRO, and gave it the confidence to pursue larger targets, said Perrot.
Acquiring Koden will make C'PRO Sharp's largest dealer in Europe, adding to its current number-one positions with Canon, Kyocera and Toshiba.
The general director said that C'PRO now accounts for 25 per cent of indirect print sales in the French market and just shy of 15 per cent of the total print market if vendors selling direct to customers are factored in.
But grabbing market share wasn't the only incentive behind the blockbuster acquisition. Perrot said that without acquisitions, C'PRO's print revenues would consistently come in flat, claiming that organic growth in the print market is virtually non-existent.
"We have been concentrating a lot on buying small, regional, local companies in the print business - in fact we do that every month - because it is the only way to have growth," he said.
He added that acquiring new customers is almost impossible without M&A, as most clients are locked into five-year financial and maintenance contracts with their suppliers.
"Acquisition is the only way to take over those contracts and gain new customers, so we are doing that all the time. The Koden acquisition is just that on a different scale," he said.
What happens next?
Despite acquiring one of France's largest print dealers, C'PRO still wants to maintain a 50-50 revenue split between its IT business, based on its Quadria acquisition, and its roots in the print space.
C'PRO will now have a total of 80,000 SMB-sized customers thanks to the addition of Koden, opening up a new base to sell its IT products and services to, said Perrot.
"With these 80,000 clients we will be able to develop different products and services - not only print but also IT and telco services," he said.
"With the Koden acquisition, we will be able to really enlarge the base of SMB clients and grow different parts of our business."
The Koden acquisition comes in the middle of a rebranding process for the French reseller. The C'PRO brand is too strongly associated with the firm's print business, said Perrot, so last June it announced it will scrap the C'PRO and Quadria names and create a new, unified brand.
Perrot said that Koden's branding will also be scrapped and fall under the new name, which has yet to be decided.
"We are still working on that," said Perrot.
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