The transaction, which is subject to requisite Indian regulatory and other approvals, is expected to be completed by early 2006.
Both companies are family businesses. The hubergroup has manufactured inks since 1765 and has 29 manufacturing sites in Europe and North America, with over 200 sales and service points worldwide. While the hubergroup appreciates the meaningfulness of its present locations for up-to-the-mark customer service, the ongoing consolidation initiatives and the increasing cost pressure both on manufacturing as well as the raw material costs has prompted the group to look for opportunities to secure its business further. Its perceived need to be present in the fast growing Asian region compared to the more slowly growing regions of Europe and North America resulted in the current transaction.
Micro is a relatively newer entrant to the global printing ink market and its activities have up to now been focused on India and North America. It has developed a significant cost effective manufacturing base by a unique backward integration into pigments and resins for printing inks especially for paste inks in a relatively short period of time. However, it has limited global distribution and marketing which has prompted its owners to seek an alliance that would mitigate risks as well as provide access to an existing distribution network.
The hubergroup becomes the market leader in India through this integration with the leading Indian printing ink manufacturer Micro whilst improving its position in Europe, North America and Asia. One of the main objectives of this move from the hubergroup’s point of view is, besides the aspects of globalisation, the backward integration into pigments and resins; from Micro’s point of view the forward integration into the sales and service network of the hubergroup.
After completeion of the transaction, the hubergroup will have consolidated annual sales of approximately US$900m. The manufacturing sites of both entities will be maintained and will support each other. Thus, two aspects will be enhanced: the quality objectives both companies have been striving for and also the optimal customer service and supply within the various global areas.
The management structure and teams at all levels will be maintained and will further be fully integrated with each other to deliver the global goals and support the supply chain-customer service matrix. The combination of knowhow of both companies will give a further cutting edge to the hubergroup’s quality - innovation leadership.
Heiner Ringer, managing director of hubergroup says, “This move will secure the future of the hubergroup from a long term point of view and will enable us to enhance our offerings to the customers. We look forward to participate and utilise the excellent facilities and talent available in India."
Yunus Bilakhia, chairman of Micro says, "Micro has in a single move catapulted from its current position to be one of the global leaders. We as principal shareholders decided in favour of this alliance after careful consideration of cultural aspects, integration and the inherent risks which Micro faced in a rapidly consolidating printing inks business. Our stated goal of professionalising all our businesses is met and we will continue to actively support this new global entity at the board and shareholders levels."
Erich Reich, managing director of hubergroup saus, “Our group was at a cross roads of strategy in terms of widening the reach and improving the supply chain. This opportunity has come at the right time securing our long term ability to supply high quality products to our customers."
Meanwhile, Bilakhia, managing director of Micro says, "In addition to our existing partnership with Bayer Cropscience in Bilag, this is another enduring long term alliance in the Ink Industry and we look forward to integrate our two businesses. This alliance will open doors to our employees to tap their inherent talent and to work with a global leader in the ink industry."