From Editor & Publisher, July 20

Flint Ink to Merge with Xsys

By Jim Rosenberg

Flint Ink Corp., the largest privately owned ink maker, headquartered in Ann Arbor, Mich., announced July 20 that it agreed to merge with Xsys Print Solutions, Stuttgart, Germany.

The merged company is to be headquartered in Luxembourg.

Since a top-management reshuffling occasioned when Chairman H. Howard Flint II (who died in June) relinquished his role as chief executive in January, there has been speculation and a few press reports on the future of Flint. Though the company acknowledged two months ago that it was considering a merger or acquisition, President Dave Fescoln responded to a report that Flint was on the block by saying "the company is not for sale."

For North American news ink operations, "we do not see any real impact," Flint Ink Corporate Communications Vice President Rita Conrad told E&P. "Xsys has very little role in North America," and the new organization is expected to serve North American customers "as we always have," Conrad added.

The merged group will have a workforce of 8,000 and combined revenues of more than $2.5 billion, based on 2004 figures. Among ink manufacturers, Flint Ink and Xsys rank second and third in size, respectively, behind Sun Chemical, a unit of Tokyo-based Dainippon Ink and Chemicals.

Xsys was formed by the merger of Germany's BASF Printing Systems and Sweden's ANI Printing Inks following their acquisitions at the end of 2004 by funds advised by CVC Capital Partners (E&P Online, Sept. 30, 2004).

Founded in 1981 as Citicorp's European private equity arm, CVC Capital Partners is a an independent private equity firm in Europe and Asia that specializes in leveraged buy-outs.

Pending various regulatory approvals, Flint said it expects the merger to be finalized "on or around" September 30. The new company will be jointly owned by CVC funds and the management of both companies, which will not include the Flints. "The family will no longer have a position in the company," said Conrad.

The companies did not disclose financial terms of the merger.

Flint Ink CEO Dave Frescoln will become CEO of the new group. Xsys CEO Peter Koivula, will become vice chairman of the new company, "with special board responsibilities for strategic matters and the relationship with major customers at a senior level." Xsys non-executive chairman Howard Poulson will have the same role after the merger.

The announcement quoted CVC Managing Director Christian Wildmoser as saying, "By building the second largest ink manufacturer in the world, Flint Ink, Xsys and CVC are creating a stronger competitor better placed to serve customers in a fragmented market, where size is of critical importance for the success of the business." In the statement, Wildmoser called the companies "a perfect regional fit," with North American and European operations and "complementary" products. Flint's Asian presence, he continued, "means that the merged entity will have a strong presence in the world's growth markets."

With 3,600 employees and 2004 sales of exceeding $1 billion, Xsys develops, produces and sells inks, pigments, resins and printing plates. It has 65 wholly owned subsidiaries in 30 countries and distributors in another 50 countries.

Employing approximately 4,500 people, and with sales of $1.471 billion for 2004, Flint Ink was founded in 1920 by the late chairman's namesake and grandfather, a bookkeeper at the Detroit Free Press, according to that paper. The company offers a range of flexographic, sheetfed, web offset, gravure, UV/EB curable, and digital and specialty printing materials and equipment. Now operating almost 100 facilities worldwide, its business is organized into North America, Latin America, Asia, India/Pacific, Flint-Schmidt (Europe), CDR Pigments & Dispersions, and emerging business units.

Flint-Schmidt, also headquartered in Germany, was created in 2002 by the merger of Flint Ink's European operations and the privately held Druckfarbenfabrik Gebr. Schmidt GmbH, based in Frankfurt and founded 1873. Flint-Schmidt employs approximately 1,200 employees at 13 sites in eight countries and had $476 million in sales last year.

"The biggest effect of this combination will be in Europe," where the joining of Xsys and Flint-Schmidt "could be significant," said Flint Ink's Conrad.

Continuing cost pressures have largely been behind this and earlier industry consolidation and price increases. Most of what goes into ink comes from petroleum, which has experienced steep increases in recent months.

Part of Flint Ink's response was its move into expert services nontraditional inks Launched last year, Progressive Color Media manages color consistency. In 2003, Flint moved into digital inks and printers with its Jetrion subsidiary and into conductive ink and radio-frequency identification tag technologies with its Precisia subsidiary (E&P, Oct. 13, 2003).

How or if those new businesses will find a place in the merged enterprise is not yet known. "I don't think there's necessarily any decision on those things," said Conrad, adding that their fates will depend in part on "how those markets evolve" and whether the subsidiaries succeed in finding a fit.