The $190m sale of label press manufacturer Gallus from Heidelberg to little-known Benpac has collapsed at the eleventh hour, with the buyer failing to come up with the cash.
The deal was agreed six months ago, and was all set to go through on completion date on 29 January, with all the necessary conditions met. Heidelberg was looking to realise around €50m from the sale. Heidelberg assumed until the very end that the transaction would be completed successfully, however it was not to be.
Benpac CEO Marco Corvi blamed 'resistance' and 'negative media coverage' for pulling out of the deal. Heidelberg is now likely to pursue Benpac for damages.
Questions were raised at the time the deal was announced over Benpac and its capabilities. The privately-owned Swiss group did acquire Muller Martini’s manufacturing facility, one of a string of acquisitions. However, in December two Benpac directors and its auditors resigned, one of those directors being ex-Heidelberg board member Stephan Plenz.
Heidelberg took a 30 per cent stake in Gallus Group in 1999, and made that 100 per cent 15 years later, with owner Ferdinand Rüesch becoming the biggest Heidelberg shareholder as part of the deal, although Chinese outfit Masterworks is now the largest shareholder.
The company has been offloading or closing non-core print operations for the past 18 months, focusing on its B1 and B2 sheetfed presses particularly for packaging printing, and on what it perceives as growth opportunities – it is for instance now one of the leading developers and manufacturers of electric car chargers.
The five sites and around 430 employees of the Gallus Group will remain with Heidelberg. Nothing will change for Gallus customers. Heidelberg will continue continue to handle sales and service for the Gallus portfolio and their personal contacts will remain the same.
Heidelberg will now be examining various options for the corporate future of Gallus. The company says that with an independent setup, and specific focus on its flexographic printing market, Gallus “made good operational progress last year” under the Heidelberg umbrella.
Irrespective of the Gallus transaction, Heidelberg says it is already benefiting considerably from the transformation program launched in the current 2020/21 financial year to further stabilise the company financially in the challenging COVID-19 environment and to align it in a future-proof manner in its profitable core business.
Since March last year, net debt has been reduced by more than €250m from a peak of €390m, and liquidity has been improved by around €450m. As a result of the accelerated M&A program, Heidelberg will generate proceeds in the mid-double-digit million euro range from the transactions completed in December.
Heidelberg says the market remains challenging due to the currently worsening COVID-19 situation. The company is therefore systematically continuing its transformation course with the measures initiated for this purpose in order to create further financial scope.
In operational terms, the third quarter of the current financial year saw a continuation of the upward trend in sales and incoming orders that has been ongoing since May 2020. Heidelberg continues to expect to achieve its targets for financial year 2020/21.