Heidelberg and Gallus—May Be the Deal of the Year

On the heels of five years of losses, Heidelberg has achieved its key goal of making an annual profit. The net profit for 2013–2014 financial year (April 1, 2013 to March 31, 2014) was $5.44 million compared to a loss of $159 million in the previous year. Next on the Heidelberg agenda is sustained profitability by expanding growth segments, implementing portfolio measures and introducing structural cost projects. The goal is to achieve an EBITDA margin of no less than 8 percent by financial year 2015/2016.

Supporting this objective is what Heidelberg calls a “strategic reorientation” from Ferdinand Rüesch AG. As described in a packagePRINTING Breaking News e-mail on June 10, Heidelberg is expanding its digital portfolio with the complete takeover of the Gallus Holding AG. Ferd. Rüesch AG will contribute its 70 percent stake in Gallus Holding to Heidelberg against the issue of new shares. Upon the completion of the transaction, Heidelberg will directly and indirectly hold 100 percent of the shares in Gallus Holding. As an anchor investor, Ferd. Rüesch AG will hold about 9 percent of Heidelberg.

This is a big move for both firms. No word yet on whether the two brands will stay separate, but given the strength of each it would make the most sense for them to continue under their own names. Either way, being joined with Gallus gives Heidelberg a fresh entrée into packaging, which is undeniably where the action and growth reside in the broader printing industry. At the same time it gives Gallus, already a household name in the packaging segment, a new reach into commercial print establishments that are considering making the leap to packaging. Being part of Heidelberg provides Gallus a real advantage because of brand allegiance and the broad penetration of Heidelberg across commercial print. Then there is the sharing of technology. Both companies are industry leaders that can certainly benefit from this merger of products, skills and expertise. Then there’s the Fujifilm part.

A Digital Future
"Our aim in acquiring Gallus is to achieve fast and profitable growth in the digital label sector. What's more, [having] a strategic investor with experience in this sector will ensure the stability of both the shareholder and capital structures," said Heidelberg CEO Gerold Linzbach. To that end, stay tuned this fall when Heidelberg and Gallus plan to roll out a new digital printing system for the label market based on Fujifilm technology. That will be an inkjet system, as Heidleberg has already announced strategic agreements with Fujifilm and its inkjet technology. As part of the Fujifilm collaboration, Fujifilm will also market Heidelberg platesetters under its own name, while Heidelberg will handle some European sales activities for Fujifilm printing plates.

And one other thing: It’s nice to see Heidelberg be profitable again.