The Rupp Report: A Merry-Go-Round: From Saurer To Oerlikon And Back To Saurer
Jürg Rupp, Executive Editor
It was a rumor in the industry for a long time, and it was (always) just a matter of time: At some
point, the Russian investor Viktor Vekselberg would sell the textile machinery division of the
Oerlikon Group to get back his invested money. And now he did sell, but not 100 percent: Let's
start from the beginning.
In September 2006, when the Oerlikon Group — which was then called Unaxis — took over the majority of the Swiss Saurer Textile Group, financial investors on both sides were playing the music. At Saurer, the British investment firm Laxey Partners was the main shareholder, and Unaxis was owned by the Austrian investment company Victory with Georg Stumpf and Ronny Pecik.
Lack Of Understanding
This acquisition made a lot of noise in the textile machinery sector and many (textile) insiders just shook their heads. How could one take away from the markets such a good brand name like Saurer? The experts were certain that this illogical deal couldn't work in the long run.
Through the acquisition of Saurer Textile machinery, and components and gears, the name of Saurer, founded in 1888, disappeared from the markets. Strangely enough, Saurer with a turnover of 2.3 billion Swiss francs in 2005 was bigger compared to the 1.6 billion Swiss francs from Unaxis (OC Oerlikon). In May 2007, Heinrich Fischer left his position as Saurer CEO — a job that he had held since 1996.
Shortly before ITMA 2007 in Munich, the Rupp Report also expressed its concerns about certain financial transactions of the former Unaxis, for which it was severely criticized at ITMA by Oerlikon Textile employees. However, in this report, only concerns were expressed as to whether and how traditional labels such as Saurer, Schlafhorst, Zinser, etc. would survive with these kinds of investors in the background. The other ongoing financial stories of the Oerlikon Group are well-known. And now the takeover has happened.
Last week, the Oerlikon Group sold its natural fibers and textile components business units and signed an agreement with the Jinsheng Group of China. Oerlikon is said to continue to develop its position in the growing man-made fibers market. Oerlikon Textile's Manmade Fibers business unit with its brands Barmag and Neumag is among the leading suppliers for man-made fibers production. In addition to the filament and staple production units, it also supplies technology for bulked continous filamnet yarns and nonwovens production.
Heinrich Fischer Is Back
The Board of Directors of the new Saurer Group will be composed of four Europeans and three Asians. The chairman of the new group is Heinrich Fischer - the last CEO of Saurer before the company was taken over in 2007 by Oerlikon. Besides Fischer, Pan Xueping, founder of the Jinsheng Group, will be a board member. The company will be led by Daniel Lippuner, who ran the Oerlikon Textile Components business, which is included in the deal.
The Rupp Report had the occasion to talk to the new (and old) CEO Heinrich Fischer. The first question was quite obvious: How does it feel to be the CEO of Saurer again, and why did it happen? "It feels very good," said Fischer, "and it is exciting too. I have known Pan Xueping for a very long time and he approached me to take over the part of CEO in the new Saurer Group. After a short period of thinking I said yes to this extraordinary project."
Next, in answering the question of why the acquisition did not include the Manmade Fibers business, Fischer said: "We also offered to take over the Manmade Fibers business, but Oerlikon's intention was to keep that division."
How does Fischer describe Pan Xueping? "He has a great experience in the textile business and is vice chairman of the China Textile Machinery Association. I was working with him since my days with Saurer and Oerlikon. He is very open-minded and respects other cultures. That's why the old management of Oerlikon Textile will be virtually the same with the new Saurer Group."
Fischer also mentioned the fact that the finance world welcomed the idea of the acquisition. So, if the deal is only to be closed by the third quarter of 2013, how do the customers react if they want to place an order? "Well," said Fischer, "there is no difference at all. Customers can order with the people they have known for many years, because the management and the people will remain the same as before."
A Milestone For Oerlikon
On the other hand, Oerlikon CEO Michael Buscher explained during the Oerlikon media conference that "this transaction is a further milestone in balancing the Oerlikon portfolio. It significantly reduces our overall exposure to the textile industry and allows us to focus on the less cyclical, higher margin Manmade Fibers business."
With sales of 2 billion Swiss francs in 2011, the textile segment represented 53 percent total restated Group sales (excluding the recently divested Solar business). After the divestment, the restated share of revenues from the textile sector will be an estimated third of total Group sales. The transaction is subject to merger control approval in a number of countries. Closing is expected in the third quarter of 2013.
The New Saurer
Now, the more than 160 years of Saurer history will continue again. The Jinsheng Group will operate their newly acquired textile machinery business under the name Saurer. Pan Xueping has signed with OC Oerlikon a purchase agreement of 650 million Swiss francs for the acquisition of the entire Natural Fibers and Components businesses. The new Saurer Group has a turnover of approximately 1 billion Swiss francs and comprises 3,800 employees.
All employees and operations in Europe, the United States and Asia will be maintained. Continuity with a focus on customer value, innovation and employee development are in the focus of the new leadership, which will operate from Europe and Asia. This is confirmed by Fischer: "As already mentioned, we remain at the current locations in Europe and Asia. Pan Xueping is a modern Chinese man who studied abroad and is well aware of other cultures."
The Jiangsu Jinsheng Group was founded in 2000 in the Jintan Economic Development Zone of the Jiangsu Province. Today, the Group is said to be a leading manufacturer of high-end computer numerical control (CNC) machines and tools and recycled cotton fibers as well as saliva-based test technologies. A further activity is real estate. The Group has an annual sales turnover of more than 6.6 billion renminbi, or approximately 1 billion Swiss francs, with more than 5,000 employees and 70 subsidiaries around the world.
The sale of a large part of the textile machinery business is not the first divestiture, since the Russian industrialist Viktor Vekselberg has taken over control of the Oerlikon Group and the company had to be freed with a refinancing of its huge debt burden. Just a few days ago, the Group had completed the sale of its solar division to Japan's Tokyo Electron.
For the new company, Pan Xueping and his group are longtime business partners of Saurer and Oerlikon, and the textile industry is familiar with him, as he is the owner of a spinning plant with approximately 300,000-400,000 spindles. Heinrich Fischer is very optimistic about the future of the new Saurer Group: "Our intention and will is to open a new chapter in the successful history of Saurer. We are very happy that virtually all employees are with us and support the idea."
It remains to be hoped that after five years, a problematic capital in the Saurer history and its business comes now to an end. Again, a European textile machinery company goes into Chinese hands. That must not be a bad sign. Nevertheless, with the Jinsheng Group, Saurer is once again under the wings of a financial investor.
December 11, 2012