Heidelberg sells coatings business
Thursday, November 21, 2019
Heidelberg has sold its Hi-Tech Coatings division to US group Innovative Chemical Products in a surprise move.
Heidelberg acquired UK-headquartered Hi-Tech Coatings in 2008 as part of its strategy to substantially grow its consumables business as it established its own-brand Saphira range.
Heidelberg said selling the business now was part of the group’s initiative to “focus on core activities and portfolio adjustments”.
The deal with Illinois-based Innovative Chemical Products Group (ICP Group) is worth a total of €38.5m (£33m), and is expected to result in proceeds of €20m for Heidelberg. Finalities should be completed this year.
Hi-Tech Coatings makes water-based and UV coatings for the printing and packaging markets and its range encompasses more than 1,000 products. It has sites in Aylesbury, the Netherlands, and the USA.
Around 60 employees will transfer to ICP Group as a result of the deal.
Heidelberg chief executive Rainer Hundsdörfer commented: “As part of our portfolio analysis and concentration on our core activities, we have come to the conclusion that we are withdrawing from our own production of packaging and printing coatings.
“We will use the funds released as a result to push ahead with strategic investments for the future on the path to our digital transformation.”
ICP Group will continue to make products for Heidelberg’s Saphira range, and Heidelberg will have access to a bigger range of products made by ICP.
A spokesman for Heidelberg added: “We will continue to offer the coatings, but will no longer produce them ourselves. We already have coatings from third parties in our range, so this will not change our strategy of expanding our business.
“Of course, the margins will no longer be producer margins, but trade margins, which are OK for a special product. Ultimately, it is about focusing on the core business in order to make it more profitable than before. This should more than compensate for the decline in margins.”
ICP Group CEO Doug Mattscheck said: “We’re looking forward to providing Heidelberg and Hi-Tech Coatings’ customers with exceptional service, an expanded product offering, and an expanded commitment to innovation and growth going forward.”
ICP Group’s Industrial Solutions division makes specialist coatings for commercial printing, labels, packaging, transactional cards, and industrial applications. Its brands include NiCoat and MinusNine.
Mattscheck set ICP up in 2015 and it has grown rapidly on the back of a string of acquisitions since.
Heidelberg chief digital officer and head of Lifecycle Solutions Ulrich Hermann added: “Above all, we want to further increase the proportion of consumables through our growing contract business. This is where we will continue to trust in Hi-Tech Coatings and ICP Group’s products in the future.”
Heidelberg will continue to manufacture printing chemicals in-house as part of its growth strategy.
The group’s share price rose by 4.49% to €1.33 on the news.