Heidelberg to unload digital, web-offset businesses

Germany's Heidelberger Druckmaschinen AG (Heidelberg) is handing over its Digital Division to Eastman Kodak Co. and will be transferring its Web Offset Division to Goss International. These steps constitute the realignment of Heidelberg's business, which it announced in November 2003.

"From now on, Heidelberg will strengthen its focus on the Sheetfed-Offset Business to optimally serve commercial, packaging and label printers," says Bernhard Schreier, Heidelberg CEO. "We're convinced that this strategy will lead Heidelberg back to profitability very quickly."

The transfer of the Digital Division to Kodak includes Heidelberg's Digital b/w business (HDI LLC, Rochester, NY), its 50 percent share in the Heidelberg/Eastman Kodak joint venture (Nexpress Solutions LLC, Rochester), as well as its 100 percent share of Nexpress GmbH in Kiel, Germany. Within the next two years, Heidelberg will not engage in competitive activities related to its digital division to be transferred.

Under the terms of the acquisition, if all sales goals are met by Dec. 31, 2005, Kodak will pay Heidelberg a maximum of $150 million in cash. Additional sales-related payments over a five-year period will be made if targets are achieved. Kodak will not pay any cash at closing for the businesses being acquired.

In effect, Heidelberg's Rochester location will be absorbed by Eastman Kodak. Roughly 2,000 people worldwide work for the Heidelberg Digital business.

The Heidelberg-Goss Web-Offset Division deal has been agreed to in principle but some issues remain to be resolved. This transaction includes Heidelberg's Commercial Web and Newspaper presses. The transaction also incorporates the Web Finishing business in the US. Heidelberg will become a new shareholder at Goss International, holding slightly below 20 percent of the company's shares. The financial details of the agreement were not disclosed. "The market volume for Web Offset printing presses has diminished," explains Schreier. "The weak economy and the corresponding low levels of advertising spending contributed to this development." Both companies expect drastically improved capacity utilization and optimized market penetration from the business combination and restructuring of activities. Nearly 2,100 Heidelberg employees at sites in the US, France and the Netherlands will be transferred to Goss International.