When announcing a takeover, the following phrase is by no means an simply empty statement that is repeatedly referred to: Subject to the approval of the antitrust authorities.

That is what happened last week. The German Federal Antitrust Authority prohibited the takeover of MBO by Heidelberg. Admittedly, this was not necessarily to be expected as most acquisitions (at least in the graphics sector) have been waved through in recent years, but the decision is also not unfounded. After all, how many folding machine manufacturers do we still have? No, it’s not about multifunctional machines for digital printing or desktop folders for the office. It’s about mature folding machines of 50 x 70 cm caliber and larger. And the selection of suppliers for printing companies (apart from special machine manufacturers) was already quite poor.

In this country, providers include Horizon (and this will probably remain so for the time being) which has an extensive range. Unfortunately, Horizon is not a German manufacturer. Therefore, we should focus on the few manufacturers left within the German market – this was probably the reason of concern for the German Federal Antitrust Authority (Bundeskartellamt). Heidelberg offers a program based on that of the former steel manufacturer, which has been part of Heidelberg since 1998. Another manufacturer is GUK, which took over MB Bäuerle from insolvency in 2017 and thus further consolidated the market. What remained was MBO with its subsidiary Herzog & Heymann, which offers very special folding machines for direct mailings and the pharmaceutical market.

The latter in particular and the folding machines that go beyond the 70 x 100 cm format would have rounded off Heidelberg’s portfolio perfectly. The MBO production site in Portugal also seemed interesting.

But for the competition authorities, this went too far. The competition would only have taken place between GUK and Heidelberg. Probably an unequal competition. The German Federal Antitrust Authority has now stopped this – though Heidelberg and MBO are still convinced that the integration of the offer would have increased customer benefits in terms of a smooth industrial process in the digital future. But there are other forms of cooperation when it comes to common goals.

“It would have been a good fit, but Heidelberg’s position in this particular market would have been overwhelming. Even without the takeover, Heidelberg will continue to pursue its strategy of further developing Postpress in the direction of industrial finishing”. – Bernd Zipper

Tension over the decision in the paper trade

And now for the next big thing. Inapa (pronounced Papier Union) has announced its intention to take over, Papyrus Germany. Here the smaller company would swallow the bigger one. But the Papyrus parent company clearly wants to part with Papyrus Deutschalnd by any means. This is indicated by the (underhand) selling price, which is beyond good and evil.

But apart from that: In connection with the printing industry, the anti-trust office seems to be obviously sensitized. First, because the Bundesverband Druck und Medien (German Printing and Media Industries Federation) has also admitted its concerns. And secondly, because both (not Inapa, but Papier Union as the German governor of Inapa, and Papyrus) have in the past been targeted by the antitrust authorities for illegal price fixing. The decision, which will have a significant impact on the paper trade, is due to be given in June.

The Antitrust Office should have noticed that some paper manufacturers are weakening or even disappearing from the market. Feldmühle has given up the production of graphic papers after another insolvency. The Heaven 42 grade, the production of which Feldmühle took over from Scheufelen, following its insolvency in 2018, is now produced by Sappi. Scheufelen had specialized in grass paper in the meantime and has once again become insolvent since the beginning of the year – with the outcome being uncertain. Although Zanders has a new investor from Sweden (Jool Invest) after his bankruptcy, he is currently experiencing enormous delivery difficulties, according to the market. Other varieties, which have so far come from Arjo Wiggins, are no longer available to the market due to the insolvency of parts of the Arjo-Wiggings Group. The paper dealers now have to compensate for these gaps – but they can access fewer and fewer paper manufacturers.

These reasons alone suggest that the paper trade is currently in an existential crisis. With all of this, why should the antitrust authorities allow a merger that further reduces competition?

My take: It may sound like minor events, but the antitrust authorities are obviously looking very closely. However, the two cases mentioned are “old world”. But how does it look in the digital world? With the market power of Google or Facebook? This is where the competition authorities have been struggling for years. Especially when it’s not about machinery or paper, but about sensitive data (as would be the case with online printers), it gets much more complicated because data protection and antitrust laws come together. But let’s wait and see whether the two paper merchants are allowed to merge.

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Takeover: No Deal for MBO and Heidelberg
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Takeover: No Deal for MBO and Heidelberg
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When announcing a takeover, the following phrase is by no means an simply empty statement that is repeatedly referred to: Subject to the approval of the antitrust authorities. That is what happened last week. The German Federal Antitrust Authority prohibited the takeover of MBO by Heidelberg.
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