Flint Ink, XSYS Print Solutions merger completed.
The transaction closed following the August approval of the acquisition and subsequent merger by regulatory authorities in Europe and the U.S. The new company will be jointly owned by CVC funds and the management of both companies.
XSYS Print Solutions itself was formed at the end of 2004 through the merger of BASF Printing Systems and ANI Printing Inks, following their respective acquisitions by funds advised by CVC, a leading independent private equity firm. XSYS was the third-largest printing ink manufacturer, with nearly 900 million [euro] ($1.2 billion) in sales in 2004. Flint Ink, the second-largest ink manufacturer worldwide when it was acquired, had $1.5 billion in sales in 2004.
With the acquisition completed, the new company, whose name will soon be determined, will be the clear second-largest ink manufacturer behind Dainippon Ink & Chemicals/Sun Chemical, with combined $2.6 billion in sales in 2004.
The new entity will have approximately 8,000 employees in 160 sites in 35 countries, and will rank as the number one or number two ink supplier in every major region it serves.
The new company also has a major presence in the pigment industry. Flint Ink owned CDR Pigments & Dispersions, a leader in pigment manufacturing, and XSYS's pigment businesses include its alkali blue manufacturing plant in Huntington, WV, as well as BASF Colorants & Chemicals Co. Ltd. in Shanghai, China.
The new company will be able to better serve the needs of global customers, a driving force behind the acquisition.
"The printing ink industry has remained fragmented at a time when our customers have expanded geographically to increase market reach while consolidating production to strengthen their market positions," said Dave Frescoln, CEO of Flint Ink, who has been named CEO of the combined company. "Having the necessary size and reach to meet the demands of these global customers is absolutely critical if we are to remain a strong competitor in the future. By realizing the synergies of complementary product portfolios, regional representation, unsurpassed technical talent and a strong management team, the new company is well positioned to meet the continuing challenges of customer demands in a rapidly changing, worldwide market place."
New Leadership Team
In addition to Mr. Frescoln, Howard Poulson, non-executive chairman of XSYS, will serve in the same role on the new board of directors. Peter Koivula, previously CEO of XSYS Print Solutions, will become vice chairman with special responsibilities for strategic matters and for relationships with major customers at a senior level. Mike Gannon, CFO of Flint Ink, will be CO0 of the new company. Mike Bissell, who had been CFO of XSYS Print Solutions, will be executive financial officer of the new company.
The leaders for the five regional operating groups are Dr. Helmut Schmidt, CEO of Europe; Bill Miller, president of North America; Jerko Rendic, president of Latin America; Damian Johnson, president of India/Pacific; and Henry Leong, president of Asia.
In addition, four global business units will be led by Dr. Thomas Telser (printing plates); Ewald Draaijer (narrow web inks); Dr. Frank Scherhag (pigments and resins); and Dr. Kenneth Stack, Jetrion LLC (digital inks, equipment and integration).
Other new operating leadership appointments include Craig Foster, vice president and general manager of the global pigment and resins group; Dr. Dirk Aulbert, general manager of the Sheetfed Division Europe; Doug Aldred, general manager of the Liquid Packaging Division Europe; Wolfgang Blumschein, general manager of the Publication Division Europe (Heatset and Publication Gravure); Tony Lord, general manager of the Coldset Division Europe; Dr. Roland Rusch, deputy general manager of the Coldset Division Europe; and Dr. Stefan Wegener, vice president of operations Europe, responsible for the integration, for QHSE (Quality, Health, Safety, Environment) and for CIP (Continuous Improvement Processes).
Opportunities and Challenges
Now that the legal hurdles have been cleared, there are numerous issues that are being addressed, including personnel and rationalizing. A new name will also be needed, and should be decided in the next few months. Executives are considering whether to keep the Flint name, as the 85-year-old company had developed significant name recognition worldwide.
"At this time, the name for the new company has yet to be finalized," said Rita Conrad, vice president, corporate communications for Flint Ink. "Certainly there is a possibility that 'Flint' will be part of the new name since the name is well-known in North America and has been gaining recognition throughout the rest of the world over the past decade."
Meanwhile, the new company is realigning its product portfolio. Flint-Schmidt GmbH & Co. KG announced Oct. 20 that it sold its metal decorating business to senior management of the division, financed by an industrial investor group and Handelsbanken. As part of the agreement, approximately 60 employees will transfer from Flint-Schmidt to the new company, and a letter of intent was signed between the new company and XSYS Print Solutions to acquire XSYS's metal deco business.
Whether the acquisition of Flint Ink is the last move by CVC in the ink industry is unknown. Mr. Frescoln said during a press conference at Print 05 that more mergers could be in the offering for the new company, perhaps centering on Asia, and spoke of CVC's plans for the new company.
"Private equity firms are in business to make gains, and I think it is safe to say that in the the next three to seven years, there will be some sort of exit by CVC," Mr. Frescoln said.
"As with many companies, the goal for the new organization is to be profitable, to be a leader in the industry in terms of size, product offerings and geographic reach, and to be highly regarded for the quality of its products, the integrity of its people and the ethics of its business practices," Ms. Conrad said. "If we are able to achieve those goals, the company should be attractive to investors when and if the decision is made to take it public."
By David Savastano
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|Date:||Nov 1, 2005|
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