Pelikan to close RM227mil German deal soon

KUALA LUMPUR: Pelikan International Corp Bhd hopes to conclude a 45 million euros (RM227mil) cash deal to acquire a 66% stake in another German stationery maker, Herlitz AG, together with the firm’s logistics centre and related assets located near Berlin, by the year-end.

Pelikan president and chief executive Loo Hooi Keat said the proposed acquisition would enable the group to double its revenue for the financial year ending Dec 31, 2010 (FY10).

“This acquisition is in line with our strategy to increase the volume of business through expansion of new products and distribution channels,’’ he told a press conference to announce the deal yesterday.

Loo sees substantial “cost savings” arising from the acquisition, given the two group’s combined revenue of about RM2.8bil based on figures reported for 2008.

“We are looking at RM100mil in terms of cost savings in FY10,’’ he said.

The “prize jewel” for Pelikan under the deal was the purchase of Hertliz’s advanced logistics assets.

Loo said Pelikan planned to close its existing three logistics operations in Germany by June next year, and consolidate the group’s distribution and supply chain management at Herlitz’s Falkensee site.

He estimated that this alone would save the enlarged group about 5.4 million euros (RM27mil) in operating costs next year.

“The two companies are essentially in different market segments; Herlitz is more of a mass market manufacturer while Pelikan caters more to the upper end of the market,’’ said MIDF Research analyst Belford Chang, who attended a separate briefing by Pelikan yesterday.

The Herlitz acquisition was the second major purchase by Pelikan, a German brand stationery maker which was listed on Bursa Malaysia in 2005 following a takeover by Malaysian investors led by Loo, in three years.

Loo said Pelikan would extend a general offer (GO) to buy the remaining shares in Herlitz.

Shares in Frankfurt Stock Exchange-listed Herlitz jumped 58% to 3.25 euros each last Friday after the deal was announced in Germany.

Loo said the general offer for the remaining Herlitz shares would value the stock at about 1.85 euros each, the stock’s average price for the last three months.

“We would like to take Herlitz private but at the moment we are sticking to our offer price,’’ he said, adding that the GO would probably be extended until the first quarter next year.

To buy out Herlitz’s minority interests would cost Pelikan an additional seven million euros.

According to Loo, the takeover would be financed with internal fund and bank loans. Pelikan would probably seek loans from local banks to pay the 45 million euros acquired from Boston-based private equity fund Advent International Corp.

The deal effectively gives Pelikan control of its closest rival in Germany.

Last year, Herlitz’s total sales stood at 300 million euros (RM1.5bil) while Pelikan’s revenue amounted to RM1.29bil in FY08.

Herlitz was estabished in 1904 but has little presence outside Europe. Pelikan is 171 years old, with seven manufacturing sites worldwide and a growing presence in Latin America and Asia.

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