Heidelberg to keep Gallus Group

Payment by benpac not made on 29 January 2021

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Gallus
Heidelberg to keep Gallus Group

The Gallus Group’s sale by Heidelberger Druckmaschinen AG (Heidelberg) to the Swiss company benpac holding ag has not been completed. In a press release dated 29 January 2021, Heidelberg states that benpac holding ag did not make the purchase price payment of Euro 120 million agreed at the day’s closing, although all the necessary conditions were met from its side. Heidelberg says it had to assume until the very end that the transaction would be completed successfully. “Heidelberg will assert its rights,” says the release.

The five sites and around 430 employees of the Gallus Group will remain with Heidelberg. Nothing will change for Gallus customers. Heidelberg will 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. In any case, Gallus will continue on its path to boosting operating performance. With an independent setup and specific focus on its flexographic printing market, Gallus
made good operational progress last year under the Heidelberg umbrella.

Transformation program reduced debt and improved liquidity

Irrespective of the Gallus transaction, which has not been completed and now seems to be off, Heidelberg says it is already benefiting considerably from the transformation program launched in the current 2020/21 financial year. The plan to stabilize the company financially in the challenging Covid-19 environment and align it in a future-proof manner in its profitable core business seems to be working.

Since March 2020, net debt is reduced by more than Euro 250 million from a peak of Euro 390 million, and liquidity has been improved by around Euro 450 million. 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 2020 alone.

Market challenged by worsening Covid-19 situation in Europe

The market remains challenging due to the currently worsening Covid-19 situation, especially in Europe, North and South America, and Africa. Heidelberg says it is systematically continuing its transformation course with the measures initiated 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 the financial year
2020-21, which ends on 31 March 2021.

Our view

The sale of the Gallus Group by Heidelberg merely revealed how seriously the Heidelberg management was taking the Covid-19 pandemic and its transformation into a leaner and more focused company. The sales, service, and supply of spare parts in many if not most parts of the world were to be continued by Heidelberg – including most likely India.

Customers were asking about the new ownership. It’s good that the uncertainty is over for them. The Gallus Group’s renewed focus as a somewhat independent entity within the Heidelberg group should work well for both existing and potential customers. The synergy in terms of agility, responsiveness, and promoting of each other’s machines by the Gallus and Heidelberg teams in India could eventually be an example for the group as a whole.

At the time of the deal, we interviewed Ferdinand Rueesch as a member of the Heidelberg board, wherein he said that one of the factors in the transaction was the need for investment in new developments by Gallus. Now, it seems that this need for cash will have to come out of the Heidelberg kitty again.

In 2024, we are looking at full recovery and growth-led investment in Indian printing

Indian Printer and Publisher founded in 1979 is the oldest B2B trade publication in the multi-platform and multi-channel IPPGroup. It created the category of privately owned B2B print magazines in the country. And by its diversification in packaging, (Packaging South Asia), food processing and packaging (IndiFoodBev) and health and medical supply chain and packaging (HealthTekPak), and its community activities in training, research, and conferences (Ipp Services, Training and Research) the organization continues to create platforms that demonstrate the need for quality information, data, technology insights and events.

India is a large and tough terrain and while its book publishing and commercial printing industry have recovered and are increasingly embracing digital print, the Indian newspaper industry continues to recover its credibility and circulation. The signage industry is also recovering and new technologies and audiences such as digital 3D additive printing, digital textiles, and industrial printing are coming onto our pages. Diversification is a fact of life for our readers and like them, we will also have to adapt with agility to keep up with their business and technical information needs.

India is one of the fastest growing economies in nominal and real terms – in a region poised for the highest change in year to year expenditure in printing equipment and consumables. Our 2024 media kit is ready, and it is the right time to take stock – to emphasize your visibility and relevance to your customers and turn potential markets into conversations.

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