China’s Masterwork Group to acquire 8.5% shares of Heidelberg

Heidelberg gains potential strategic anchor shareholder

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Heidelberg

On 23 January 2019, Heidelberg announced that it is looking to further improve its market position in the growing packaging printing segment by taking its long-standing sales partnership with Masterwork Group Co., Ltd. (Masterwork), China’s largest manufacturer of die-cutters and hot-foil embossing machines, to a whole new level. Based in the Chinese city of Tianjin, Masterwork is to obtain around 8.5% of the Heidelberg share capital under a cash capital increase from authorized capital excluding shareholder subscription rights.

The implementation of the capital increase is subject to approval by the Heidelberger Druckmaschinen AG supervisory board. The proposed capital increase provides the opportunity for Heidelberg to acquire a further strategic anchor shareholder with a long-term investment horizon as well as to strengthen its equity. Subject to approval by the relevant bodies on both sides and the Chinese authorities, the capital measure should provisionally take place by the end of the first calendar quarter of 2019.

The issue price of the new shares is set to be EUR 2.68. If the market price significantly outstrips the envisaged issue price, this will be renegotiated in line with statutory requirements. The funds Heidelberg generates with the capital increase are to be used to accelerate its digital agenda (digitizing products, processes, and business models, for example) and for general business financing. Masterwork supports the Heidelberg strategy and is demonstrating its clear commitment to long-term collaboration. Heidelberg is currently considering and discussing whether it will seek to obtain a shareholding in Masterwork.

The proposed capital increase will make Masterwork a strategic anchor shareholder with a long-term investment horizon. Ferdinand Rüesch of Gallus became the first anchor shareholder with approximately 8% of the shareholding when the family-owned label press manufacturer Gallus was fully acquired by Heidelberg in 2014. On the day of the announcement, 23 January 2019, Heidelberg shares were trading at EUR 2.08, up 20.39%.

“The Heidelberg Management Board and Supervisory Board are delighted that our long-standing, successful collaboration with Masterwork is to become much closer. This opens up further potential in the growing packaging printing segment, especially in China – the world’s largest individual market. We are expecting better capacity utilization at our plants across the globe to make us far more efficient, but I would like to stress that this will not weaken our sites in Germany. We are delighted that in Masterwork we are obtaining another long-term investor that firmly believes in the company’s innovative prowess, strategy, and potential for the future,” comments Heidelberg CEO Rainer Hundsdörfer.

Masterwork president Li Li spoke of his company’s commitment to what it believes is the right fit going forward, “Heidelberg is our ideal partner for jointly leveraging growth potential in the packaging printing market. The stake we are obtaining in this long-established company and world market leader underlines that we are in it for the long haul and are confident Heidelberg has adopted the right strategy.”

Since Heidelberg gave up its own postpress and converting manufacturing, the two companies have worked together in both manufacturing and worldwide sales. Masterwork acquired Heidelberg’s die-cutter and folder-gluer technologies in 2014. Heidelberg has an excellent offset press manufacturing site in Qingpu, near Shanghai, established in 2006. It expects to also benefit from joint component manufacturing operations at the Masterwork plant in Tianjin in the future.

The Covid-19 pandemic led to the country-wide lockdown on 25 March 2020. It will be two years tomorrow as I write this. What have we learned in this time? Maybe the meaning of resilience since small companies like us have had to rely on our resources and the forbearance of our employees as we have struggled to produce our trade platforms.

The print and packaging industries have been fortunate, although the commercial printing industry is still to recover. We have learned more about the digital transformation that affects commercial printing and packaging. Ultimately digital will help print grow in a country where we are still far behind in our paper and print consumption and where digital is a leapfrog technology that will only increase the demand for print in the foreseeable future.

Web analytics show that we now have readership in North America and Europe amongst the 90 countries where our five platforms reach. Our traffic which more than doubled in 2020, has at times gone up by another 50% in 2021. And advertising which had fallen to pieces in 2020 and 2021, has started its return since January 2022.

As the economy approaches real growth with unevenness and shortages a given, we are looking forward to the PrintPack India exhibition in Greater Noida. We are again appointed to produce the Show Daily on all five days of the show from 26 to 30 May 2022.

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