Brother completes £1bn Domino acquisition

Japan's Brother Industries has completed a £1.03bn ($1.6bn) takeover of UK coding specialist Domino Printing, first announced in March.

The 915 pence-per-share deal gives the Japanese company a much larger presence in the coding and marking business, particularly in the area of providing digital printing capabilities such as barcoding to other companies.

Domino has developed a big customer base in industries such as food and beverage, pharmaceuticals and tobacco, all of which have seen a shift towards a greater emphasis on product traceability in recent years.

Digital printing lends itself to marking individual products with unique, pack-level serial numbers and can help companies meet the demands of new regulations such as the EU's 2012 Falsified Medicines Directive (FMD) and Tobacco Product Directive (TPD), along with other emerging legislation around the world.

There had been speculation that Brother's offer might flush out other interested parties - with US coding equipment rivals Danaher (Videojet) and Dover (Markem-Imaje) both cited as possible suitors - but no rival bid was forthcoming.

When the deal was first announced, Domino chairman Peter Byrom said that the company was facing "a new breed of competitor with significantly greater scale and financial firepower," making it clear that the company needed to find a partner that brings "complementary skills and strengths in digital printing."

Immediately after the deal completed Domino's shares were de-listed from the London Stock Exchange, and the company will now operate as an autonomous division within its Japanese parent.

The Domino brand and management structure will be unaffected, according to a statement released today by the UK firm, which posted revenues of £350m last year and pre-tax profit of just over £56m.

"Brother respects and values Domino’s brand equity, technologies and strategic vision for the business and the markets it serves," said the UK company's chief executive Nigel Bond.

"The companies will be working closely together on natural growth opportunities, as well as explore collaborative possibilities to develop new products," he added.

Domino employs around 2,300 staff, while Brother - which makes printers and other equipment such as sewing machines, machine tools and industrial parts - has a headcount of approximately 33,000.

Last year, Domino indicated it had a market share of around 17 per cent in the global coding and marking market, which it valued at a little over £1.7bn and growing at 4-6 per cent a year. Digital printing accounted for around £440m of the total but is growing much faster at around 11 per cent a year.

Along with Domino, Dover and Danaher, other players in the sector include Diagraph, Hitachi Industrial Equipment Systems and ID Technology.

Recent market research from Technavio suggested the overall coding and marking market would grow by more than 5 per cent a year between 2015 and 2019, driven by better integration of equipment into production lines, increased demand for more graphical coding and technological advances, particularly in inkjet printing.