Web Offset Consolidation – manroland Web Systems and Goss to Merge

Ralf Schlozer
Mar 5, 2018

A few years ago, the prospect of two major offset press manufacturers merging would have easily dominated the headlines. And there was never a great number of preeminent manufacturers of web offset commercial printing and newspaper presses. Together with KBA, Goss and manroland Web Systems were among the big three, complemented by a handful of much smaller, more specialized manufacturers mainly in Japan and India. A few other manufacturers left the market recently such as Swiss newspaper press manufacturer Wifag.

Goss and manroland have a long history of press manufacturing but had a mixed past since the first big slump in web offset press demand following the year 2000. manroland started the millennium as a subsidy of the German heavy industry conglomerate MAN, then became an independent company in 2006, and went bust in 2007. Following the insolvency, manroland was split into a sheet-fed and a web-fed group, the latter being acquired by the German manufacturing holding Possehl Group. The recent history of Goss is even more protracted. After being spun off from Rockwell in 1996, Goss filed for chapter 11 in 1999, and again in 2001, blaming the downturn in press demand. A group of banks as creditors sold the business to MatlinPatterson Global Opportunities Partners. At that time Heidelberger Druckmaschinen had its ambitions set on entering the web offset business and invested heavily. Soon after Heidelberg did shed all low margin businesses to dress books before going public and Goss did pick up the web press activities in 2004. This doubled the global headcount at Goss to about 4,000. In 2010 the Shanghai Electric Group acquired Goss, adding it to its range of (sheet-fed) offset press and finishing equipment manufacturing brands. In 2015 the private equity firm American Industrial Partners acquired Goss. All the while both companies shed thousands of jobs compared to its heydays in the early 2000s

Under the terms of the proposed deal Goss and manroland Web Systems will combine their businesses. Details are still being negotiated, and everything depends on regulatory approval. The main site of manroland Web is Augsburg in Southern Germany. The main site of Goss is located in Durham, New Hampshire. Both have sales and service organisations as well small parts/components manufacturing locations across the globe. The current shareholders, American Industrial Partners and the Possehl Group, will continue to co-own the combined company. The Possehl Group will hold the majority and the combined operation will be headquartered in Germany. Subject to regulatory approval, the merger is expected to be completed by the middle of 2018. For the time being both companies will continue to operate independently.

Goss International’s Contiweb business, which offers drying and web-handling products, is not included in the transaction. Contiweb will now become an independent company under the ownership of American Industrial Partners, with its operations headquartered in the Netherlands.

Regulatory approval would have been a major hurdle for the merger a few years ago. Both manufacturers are leading players in commercial and newspaper web presses. Today their main business is not making new presses but servicing existing ones – including upgrades and retrofits. The global market for commercial and newspaper web offset presses did shrink dramatically. Ten years ago, the global market for new presses hovered at the € 2 billion mark. By 2011 the market was reckoned to be around €700 million in sales only and continued to fall about 20% every year since. For 2017 manroland reckons the market was a meagre €160 million (although some sales of small web offset presses in developing market might slipped the net; the sum excludes packaging and label presses). In 2016 manroland Web Systems still had revenues of €242 million, with Goss netting around US$ 210 million – underscoring the importance of the service and retrofit business nowadays.

It need needs to be mentioned that both companies were exploring other opportunities besides commercial and newspaper printing all along. manroland Web Systems is manufacturing finishing systems for digital print lines (under the label Foldline and Formerline). Attempts in reselling digital presses faltered however. Obviously both companies are eying the packaging market as well. manroland just launched the Varioman F Line, while Goss offers the VPak for packaging. Both offer engineering services, parts manufacturing and have some workflow solutions for the print room. Still these activities contribute little to the overall revenues.

A lack of profitability in web offset press manufacturing since the post 2000 slump sparked ideas on combining press manufacturing businesses already, however no company seemed to be ready to give in, and regulatory issues remained a big hurdle. The ongoing decline in web offset press sales has eradicated these obstacles.

The combined company would benefit from their complementary geographic footprints (with Goss being North America focussed, while manroland is stronger in Europe), create synergies in service coverage, and provide access to each other strengths & IP. This would ensure long-term viability as cost of the service networks rises while the number of sites declines. Also chances of developing the nascent new business opportunities are improved when pooling resources. If approved, the merger would make a lot of sense to both companies.

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