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European Toner & Inkjet Remanufacturers‘ Association

European Toner & Inkjet Remanufacturers‘ Association. Mergers <> Acquisitions <> Cooperations in the European Cartridge Remanufacturing Industry Strategy and Process Development by Friedrich W. Becker-Birck / Senior Partner / BECKER-BIRCK CONSULTING PARTNER GbR – Hofheim/Germany

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European Toner & Inkjet Remanufacturers‘ Association

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  1. European Toner & Inkjet Remanufacturers‘ Association Mergers <> Acquisitions <> Cooperations in the European Cartridge Remanufacturing Industry Strategy and Process Development by Friedrich W. Becker-Birck / Senior Partner / BECKER-BIRCK CONSULTING PARTNER GbR – Hofheim/Germany ETIRA Conference Frankfurt 25th January 2005

  2. European Toner & Inkjet Remanufacturers‘ Association Outline • Scenario • Consolidation: Cooperation / Acquisition / Mergers-JV • Search for Pearls and Snips • Golf Course Deals vs. Professional Approach • Structured Process • Selection Process • Evaluation of Alternatives • Negotiations / Closure / Transaction • Conclusion

  3. European Toner & Inkjet Remanufacturers‘ Association Scenario • Market growth will continue / attracts newcomers in Europe and from Far East • Battle stronger among OEM, Remanufacturers, Private Label • New trends within distribution channels: commercial vs. retail • Increasing, harsh competion + EURO revaluation: prices, margins, profits decline • Consolidation of a fragmented remanufactoring industry • Key factors for survival and growth: profit level, cost leadership, advanced, high speed R&D and production technology, distribution, branding

  4. European Toner & Inkjet Remanufacturers‘ Association Consolidation Cooperation - Lowest degree of consolidation, engagement – no marriage - Joint resources, e.g. R&D, production, logistics, receycling or distribution - Only, if strong synergies - Disadvantage: > transfer of sensitive information > considerable conflict potential - Advantage: good test period for marriage

  5. European Toner & Inkjet Remanufacturers‘ Association Consolidation Acquisition - Requires long-term strategy and strong financial resources - Different solutions: > share deal / 100% or stake / cross-sharing > asset deal (properties, accounts, patents) - Direct marriage, no testing or engagement period, risk to fail - Total influence on future development - Better realisation of synergies - Important: > business plan must show a clear return on investment

  6. European Toner & Inkjet Remanufacturers‘ Association Consolidation 3. Mergers – Joint Ventures ( JV ) - Merging 2 or more companies and found a bigger, stronger one - Mergers are excellent consolidators - Merger = merge capital and business / give up full autonomy - Merger , if no survival, no successor / shared autonomy - JV = start-up by 2 or more existing companies / investors - JV‘s establish additional players / companies / no consolidation - JV‘s are mainly established for new businesses or new markets - JV‘s could be usefull for receycling of empty cartridges

  7. European Toner & Inkjet Remanufacturers‘ Association Search for Pearls and Snips We are facing currently a dramatic restructuring process in Europe: Large conglomerates concentrate on core business and divest side business Banks liqidate industrial parcels of shares and participations Family owned medium-sized companies are sold because there is no successor No good climate for IPO‘s This development has brought Venture Capital and Private Equity Investors into the market. In order to get the best return they are searching only for pearls and snips.

  8. European Toner & Inkjet Remanufacturers‘ Association Search for Pearls and Snips / continued VC and PE Companies are mainly American and British: • Blackstone ( USA ) • Morgan Stanley ( USA ) • Permira ( GB ) • Terra Firma ( GB ) • 3i ( GB ) 3i has invested VC in various European companies of the IT and OP industry. The engagement is limited to approx. 5 years and leads to an IPO or sale of their shares to other investors.

  9. European Toner & Inkjet Remanufacturers‘ Association Golf Course Deals vs. Professional Approach • Golf Course Deals: often based on private contacts • Advantage: vital decisions are taken by handskake, low cost, fast • Disadvantage: > driven by private motives for growth or suvival > superficial evaluation of effects and r.o.i. > no examination of alternatives • Professional Approach: > involve external expert > market insider and/or analyst > higher cost and fees > structured process, time-consuming > evaluation of alternatives > minimisation of risk for investment

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