French firm in the frame as diary maker Letts goes up for sale again

LETTS Filofax, the maker of diaries and personal organisers, has been in talks with a French stationery company that could lead to another change of ownership for the Dalkeith-based business.

The Scotsman has learned that Letts is keen to find a trade buyer or re-finance its operations. French giant Exacompta Clairefontaine is one of several firms that have held preliminary discussions with the 216-year-old company.

Letts is fighting the rising tide of tablet-based personal organisers and has launched a “hybrid” version of its traditional paper-based product that incorporates some electronic elements in an attempt to remain competitive.

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Chief executive Gordon Presly said the company appointed advisers in May with a view to engineering an exit for Phoenix Equity Partners, the London-based venture capital group that took a 50 per cent stake in Letts in March 2006. The aim is to have a deal done by the first quarter of next year.

Presly said: “As part of that process, we have been talking to a number of potential purchasers, and we are looking at various re-financing options.”

Phoenix and the Letts management team – including Presly and ten others – paid £45 million to take control of the business from Dunedin Capital Partners five years ago.

Edinburgh-based Dunedin initially invested in Letts in 2000, taking a 74 per cent stake in a £17m management buy-out from Bemrose Corporation.

Presly declined to offer a potential price tag for the business, but conceded that markets had been particularly difficult in the past couple of years.

Letts exports to more than 75 countries and has nine international subsidiaries spanning Europe, the Far East and North America.

The latest accounts, for the year to 31 January, 2011, showed a 6.7 per cent decline in turnover to £57.2m, with more recent figures due to be filed with Companies House by the end of next month.

“Trading has been difficult for all retail-facing companies, regardless of what category you are in,” Presly said.

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“The iPad is a bit of a lifestyle changer … However, all the research we have done shows that 56 per cent of adults continue to use paper to organise their lives.”

The company recently repatriated some manufacturing activity from China to its headquarters in Dalkeith, where about 300 of its 500 global staff are employed. The move followed a £230,000 investment in equipment at the end of last year.

Asked whether a trade sale was the preferred option, Presly said the main aim was to create a “healthy home” for the business.

“At the end of the day, we are in a different market than in years past,” he said. “Whatever happens, I have got a duty to ensure the company is healthy in a financial sense.”

The Exacompta Clairefontaine group is understood to be favourite to acquire Letts. It was founded in 1996 from a merger of Exacompta, AFA and Papeteries de Clairefontaine, bringing together firms involved in the full range of office supplies. It has more than 3,500 staff.

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