Masterwork Group Co (Masterwork) is set to obtain a nearly 8.5% stake in Heidelberg, making it the largest shareholder in the German manufacturer, which is looking to further improve its market position in the packaging printing segment.
Chinese post-press specialist Masterwork, the country’s largest manufacturer of die-cutters and hot-foil embossing machines, is to obtain the 8.46% share capital under a cash capital increase from authorised capital excluding shareholder subscription rights.
The implementation of the capital measure is subject to approval by Heidelberg’s supervisory board. Subject to approval by the relevant bodies on both sides and the Chinese authorities, it should provisionally take place by the end of the first calendar quarter of 2019.
The total value of the investment is €68.99m (£60.13m) and the issue price of the new shares is set to be €2.68. If the market price significantly outstrips the envisaged issue price, this will be renegotiated in line with statutory requirements.
Heidelberg’s share price climbed by more than 20% to €2.08 following the announcement yesterday (23 January) and stood at €2.01 at the time of writing.
Heidelberg said the move will take its long-standing sales partnership with Masterwork “to a whole new level” and that the proposed capital increase will provide it with the opportunity to acquire a further strategic anchor shareholder with a long-term investment horizon, as well as to strengthen its equity.
Heidelberg’s current largest shareholder is Ferdinand Rüesch, who has owned a stake of around 9% in the business since summer 2014. As the number of shares are increased, Rüesch’s stake in the manufacturer will reduce to nearly 8% following the approval of the Masterwork investment.
At the time of writing, Heidelberg had a free float of around 91% of the total share capital, representing 278,735,476 shares.
The funds Heidelberg generates with the capital increase are to be used to accelerate its digital agenda, including digitising products, processes, and business models, and for general business financing.
Heidelberg is currently considering and discussing whether it will seek to obtain a shareholding in Masterwork.
Heidelberg chief executive Rainer Hundsdörfer said: “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 utilisation 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.”
Masterwork president Li Li added: “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.”
The manufacturers said the possibility of linking Masterwork’s post-press machines to the Heidelberg cloud “is a big advantage when it comes to realising the value proposition of using production data to boost customers’ productivity”.
Heidelberg will continue to supply the dynamic markets in China and the rest of Asia from the site in Qingpu, near Shanghai, that it established in 2006.
As a result of the closer working relationship with Masterwork, it will also benefit from joint component manufacturing operations at the Masterwork site in Tianjin in the future.
A Heidelberg spokesperson told PrintWeek: “Since they acquired our post-press packaging technology five years ago, we have had a very close relationship with Masterwork.
“They have developed and produced the products since then and we are the exclusive sales channel worldwide, except for China and Japan.
“This is the next step and the aim is really to secure and improve our partnership by investing in future products and solutions. By taking a stake in Heidelberg, this will secure the sales channel for them, while for us the benefit is that we have a reliable partner in the growing packaging market segment.”
Addressing suggestions that Heidelberg could end up being owned by a Chinese company, the spokesperson said that “there is no intention today” by Masterwork to increase its stake.
“The first step is that they get the stake, because the capital increase has to be done, and this is expected by March. They have clearly stated that they would like to be the biggest shareholder of Heidelberg. If somebody else was to take a share then there is an opportunity, only by approval by the Heidelberg board and [relevant bodies], to increase the stake, but today there is no intention.”