UPDATE GALLUS
The future of Gallus 1
Following the failure of the Benpac acquisition, Heidelberg CEO Rainer Hundsdörfer explains that Gallus’ future lies as a more independent company within the Heidelberg family
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ver the last year, the label industry has been avidly following the fate of Gallus, an iconic company which was one of the original founders and key innovators of the narrow web converting industry. This story centered on Gallus’ changing relationship with Heidelberg, a leading name in the global commercial sheet-fed press market. It begins in 1999, when Heidelberg acquired a 30 per cent stake in Gallus with a view to better understanding the narrow web label business. There was some limited technology cooperation, particularly in the development of offset printing heads for the Gallus RCS press platform, and in some parts of the world Gallus took advantage of Heidelberg’s sales and support network to bolster its global operations. In August 2014, Heidelberg exercised its option to buy the remaining shares in Gallus, and set about fully integrating the company into Heidelberg’s global sales and service network. 14 ProPack.pro June 2021
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By Andy ThomasEmans; republished from Labels & Labeling, with permission 1. Heidelberg CEO Rainer Hundsdörfer 2. Gallus label head of business unit Dr Frank Schaum
Development of the Gallus Labelfire print engine, integrating Fujifilm printhead technology, was moved to Heidelberg’s Wiesloch manufacturing site where it formed a key plank of Heidelberg’s broader tilt towards digital across its sheet-fed operations. Then in July, Heidelberg made the startling announcement that it had sold Gallus to Switzerland-based Benpac Holding for €120 million, a deal subsequently passed by the German Federal Cartel office and due to be closed by the end of 2020. The closing date was postponed until the end of January 2021, but when Benpac failed to make the payment on the final deadline of January 29, the deal collapsed and Gallus remained a member of the Heidelberg group. How had this situation come about? And where does it leave the GallusHeidelberg relationship going forward? These were the questions put to Heidelberg CEO Rainer Hundsdörfer and Gallus label head of business unit Dr Frank Schaum.
Navigating the COVID-19 crisis
According to Hundsdörfer, the decision to sell Gallus was taken a little over a year ago, as the COVID pandemic was sweeping across Europe. But the subject of Gallus’ place in the Heidelberg operation was already under consideration. “We had started a restructuring program in 2019, and one of the aims was to make Gallus more independent, so Heidelberg could concentrate on its core business of sheet-fed equipment, services, software and subscriptions,” Hundsdörfer said.
“We had already tried to fully integrate Gallus into Heidelberg, because it is close to our core packaging business, but this did not prove to be the right way. We learned narrow web label is another market. “Sheet-fed and in-mold label is not the same customer base, except maybe just at the top. Full integration had just cost time and money. “So, we wanted to give Gallus back its management independence so it could chart its own growth in a more agile way. “We looked for the best of both worlds – where independence was of most importance to Gallus; and where the infrastructure of Heidelberg could be used, for example in Heidelberg’s global logistics and sales service.” The restructuring plan was finalised in March 2020. But this was swept away a few weeks later when COVID threatened the whole industry. “The Benpac deal did not come out of a clear sky. The company had already taken on Gallus technicians from the St Gallen operation who would otherwise have been made redundant and had expressed an interest in taking on Gallus’ wider manufacturing operations,” Hundsdörfer said. “We had other deals with Benpac, and we had to secure Heidelberg’s financial stability, so it was a welcome offer at that time. In the tight economic situation from COVID-19, it was a logical move for us to sacrifice a good piece of growth business to get us through the crisis.” Hundsdörfer now insists that Heidelberg’s financial situation has greatly improved compared to a year www.propack.pro