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.