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Huber Group Acquires Majority in Micro Inks

Published on 2005-11-02. Author : SpecialChem

The Huber Group, the world's 5th largest printing ink manufacturer has agreed to form an alliance with the Bilakhia Family in Micro Inks Ltd. Huber has agreed to acquire a majority stake between 50.5% and up to 59.06% in Micro Inks at a price of Rs.675/- per share resulting in a total consideration of up to Rs.9915 million. Bilakhias would continue to hold a minority interest in Micro Inks. Huber, through its holding company MHM Holding GmbH will also launch the obligatory tender offer to acquire up to 20% of the shares of Micro Inks Ltd

While Huber will be able to appoint the majority of the board members in Micro Inks, it is proposed that the positions of the Chairman and the Managing Director will continue to be occupied by the Bilakhia Group. Huber will, in addition, appoint an Executive Vice Chairman and Managing Director.

The transaction, which is subject to requisite Indian regulatory and other approvals, is expected to be completed by early 2006.

Both parties have also agreed to cooperate globally and the Bilakhias will acquire a 46% stake in a European subsidiary of Huber - Stehlin & Hostag AG. Both parties envisage that this JV could be a precursor to increase the level of the partnership to the Huber holding company level in due course subject to confirmation of both parties and regulatory approvals. The Bilakhias will also have representation in the Huber's Board of Directors.

Both companies have similar cultures in that Huber is a long standing ‘family run' Business and Micro Inks is a listed entity with significant contributions and passion from the promoters. Huber manufactures inks since 1765 and has 29 manufacturing facilities in Europe / North America and with over 200 sales and service points world-wide. While Huber 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. The need to be present in the fast growing Asian region compared to the slower growth rates in Europe and North America resulted in the current transaction.

Micro Inks 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. Micro Inks 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, they have limited global distribution and marketing which has prompted them to seek an alliance that would mitigate risks as well as provide access to an existing distribution network.

Huber becomes the market leader in India through this integration with the leading Indian printing ink manufacturer Micro Inks and improves its position in Europe, North America and Asia. One of the main objectives of this move from the Huber 's point of view is, besides the aspects of globalisation is the backward integration into pigments and resins; from the Bilakhia group's point of view the forward integration into the sales- and service network of the Huber.

Post this transaction, Huber would have consolidated annual sales of approximately USD 900 Mio. The manufacturing facilities of both entities will be maintained and will support each other. Thus, two aspects will be enhanced, a) the quality objectives both companies have been striving for and also b) 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 know-how of both companies will give a further cutting edge to Huber's quality - innovation leadership.

Mr Heiner Ringer, Managing Director of Huber said "this move will secure the future of Huber 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."

Mr Yunus Bilakhia, Chairman of Micro Inks stated that "Micro Inks has in a single move catapulted from its current position to be a part of 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 Inks faced in a rapidly consolidating printing inks business. Our stated goal of professionalizing all our businesses is met and we will continue to actively support this new global entity at the board and shareholders levels."

Mr Erich Reich, Managing Director of Huber said that "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."

Mr Anjum Bilakhia, Managing Director of Micro Inks stated "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."

Kotak Investment Banking is the financial advisor to the transaction.

Source: Micro Inks


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