Watmoughs defence against bidder `backward looking'

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The Independent Online
Quebecor Printing Inc (QPI) of Canada yesterday said the defence by its UK rival Watmoughs Holdings against its bid "reveals a company that continues to look backwards in an industry that is changing rapidly".

Watmoughs' defence document stated that its problems were behind it and that it is well placed to generate increasing value for shareholders if it can beat off Quebecor's hostile pounds 188m bid.

However, Quebecor said this document contained "little more than a gloss on Watmoughs' interim statement strategy. The stock market reacted negatively [the Watmoughs ordinary share price fell nearly 9 per cent on the day of announcement] and QPI questions what reassurance this same old strategy offers Watmoughs shareholders".

It said Watmoughs "fails to address the realities of today's competitive printing market; does not print a single top ten UK weekly consumer magazine title [while European competitors already print three such titles] and recently lost the Mail on Sunday's television guide contract due to intense pricing pressure.

"Watmoughs' strategy of focusing on long run time sensitive and repeat business is no guarantee of future growth. It fails to address the reality of today's printing market in which larger and better invested printers, both in the UK and on the Continent, are competing and will continue to compete for the same business," the company said.

Quebecor said Watmoughs' vulnerability to competition was also highlighted by "the strong performance of QPI's UK operations".

"Through Hunterprint, QPI has successfully expanded its presence in newspaper supplements from approximately 10.7 billion tabloid equivalent pages per annum at the time of Hunterprint's acquisition to approximately 27.8 billion such pages today, an increase of 160 per cent. Of this increase, 29 per cent epresents a net gain at Watmoughs' expense," Quebecor said.