Novar in £250m outsourcing deal

Novar, the building products and printing group, is this week expected to announce a £250m outsourcing deal to let Xchanging handle large swathes of its administration and purchasing.

The deal will mean that Xchanging, formed three years ago by a team of consultants who left Accenture, will be in charge of all Novar's travel arrangements, transport fleet management, contract labour and telecom- munications. It will also help buy printing and advertising for Novar's marketing operations. The deal is one of Xchanging's largest. It had to postpone a planned £1bn flotation last year because of weak equity markets.

The group secured an extra £50m of backing from its largest investor, General Atlantic Partners, which will help fund its expansion, and chief executive David Andrews still hopes to float the company when the environment is right. The outsourcing group has already struck joint ventures with Lloyd's of London and BAE Systems to take control of much of their back-office functions.

The Novar deal could save the embattled building and printing group up to £10m a year. It is under pressure from UK Active Value, the investment group, which bought a 15.2 per cent stake last year and pressed it to sell off its security printing business. After putting it on the market, Novar decided it was not timely to sell the operation.

On Wednesday it announces full-year profits, which are expected to show a pre-tax recovery to £85m – from £29.2m in 2001.