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Private equity

September 12, 2005

Only a few months ago BASF Printing Systems and ANI Printing Inks merged to create XSYS Print Solutions. Now it plans to swallow up Flint Ink, a sizeable group in its own right. The as-yet unnamed group will create the world’s second largest ink maker, behind Sun Chemical. Including analog and digital printing plates, the combined turnover is around US$2.6 billion, with a workforce of 8,000 employees. The deal is expected to gain the approval of the European Union regulatory and competition authorities in late September.
In a sign of the times, the deal was put together by CVC Capital Partners, an independent private equity firm. It has funds of US$11 billion and is based in London with offices throughout Europe. From 1981 to 1993 it was owned by Citicorp. These type of venture capitalists specialize in leveraged buy-outs and are now prominent in driving acquisitions and mergers throughout western European. They are particularly active in industries with historically low margins, such as the graphics industry. Here, even quite large companies hit a financial ceiling in funding growth by acquisition, especially publicly-quoted firms with commitments to shareholders and pension funds. By their very nature, venture capitalists are unhindered by these considerations or have any commitment to any particular industry. The worst seek to make quick profits by stripping assets, cutting payrolls and selling freehold land holdings. Nevertheless, some do appear to enhance their industry connections and build portfolios of related interests. CVC appears to be in this category since over the past decade it has invested heavily in European packaging, paper and container board companies.
Of course, behind every major takeover there is a personal element. For Flint Ink — of Ann Arbor, MI, USA — the deal ends 85 years of family ownership. H. Howard Flint II, who died in June of pancreatic cancer at age 66, played a major role in growing the business into a billion-dollar operation with nine global divisions, including Flint-Schmidt, the European operation, and Jetrion, a developer of UV-
curable inkjet technology. Dave Frescoln, who was appointed chief executive officer in January, keeps this post in the new group, while XSYS chief executive Peter Koivula becomes vice chairman. XSYS has 60 subsidiaries in 30 countries, producing inks and plates for the graphics and packaging industry. Its headquarters are in Stuttgart, Germany, and there are 3,600 employees producing an annual revenue of US$1.07 billion.
Predictably, the corporate line is that the customers are the ultimate winners: “Flint Ink, XSYS and CVC are creating a stronger competitor better placed to serve customers in a fragmented market, where size is of critical importance for the success of the business,” says Christian Wildmoser, CVC’s managing director. “We are continuing to globalize the businesses following the needs of our customers in the printing industry. The transaction will significantly strengthen the combined group’s positions in each of its core inks segments.”
• XSYS Print Solutions recently agreed to form a partnership with Microtrace LLC to deliver a traceable ink for narrow web label printers to help deter counterfeiting. The Microtaggant UV-curable inks can be printed on most substrates using flexo or screen printing. They offer a unique numeric code sequence in a multiple colored layer format delivering multiple layers of security through a single microscopic particle.
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