Esselte takes the lead in the office supply industry worldwide
Esselte Office Products becomes the global leader in the manufacturing sector of the office supplies industry by acquiring the Leitz Group, the largest office supply manufacturer in Germany. The European market presence of the new entity will be strongly improved. Combined sales will total 12 billion SEK with 8,000 employees in 32 countries. Significant merger benefits will accrue in production, logistics, product development and administration. Esselte Office Products has signed a binding agreement to acquire the Leitz Group, a privately held office products manufacturer headquartered in Stuttgart, Germany. The acquisition is subject to regulatory approval, which is expected in the fourth quarter. Total consideration amounts to 2.6 billion SEK, including cash and the assumption of debts. The goodwill, including restructuring provisions arising from the acquisition, is approximately 1.7 billion SEK and will be amortized over 20 years. Significant synergies are expected to be captured over the next few years through the combination and consolidation of operations. The acquisition is expected to result in a minor dilution of earnings per share (EPS) in 1999 and be substantially accretive to EPS from 2000 onwards. LEITZ is one of the most recognized office product brands in Europe with a broad product line of filing and storage products, office accessories, computer accessories, filing software and document management software. The lever arch file was invented in 1896 by Leitz and is the most widely used filing and archiving method worldwide today. The Leitz Group has sales of approximately 2.4 billion SEK and 2,400 employees. They have the leading position in Germany and strong market positions with subsidiaries in France, Switzerland, Austria, United Kingdom, Holland and Turkey. Manufacturing units are located in Germany, France and Turkey. In recent years Leitz has made significant investments in automation and technology which will enhance Esselte Office Products´ existing operations Through the combination with Leitz , Esselte Office Products will strengthen its already leading position in Europe and becomes the largest office supply manufacturer in the world. The company will gain a leading market position in Germany which so far has been a weak area for Esselte Office Products. In addition the expansion in Eastern Europe will accelerate. "Leitz is an excellent fit with Esselte", comments Robert K. Scribner, President and CEO of Esselte Office Products. "Leitz has strong positions where Esselte is weak and will provide products that we can introduce into new geographic markets. They bring an efficient production, logistics and sales organization to the Group and, together, the combined entity will gain significant economies of scale allowing us to better serve our industry." "We have seen a very fast development in the office supply industry in Europe and the US during the last several years. The rapid consolidation has created a challenging environment. Leitz is a well established and well managed, profitable company. Together we can capitalize on the opportunities created by rapid changes and become the leading player in the manufacturing sector of the office supply industry worldwide ", concludes Mr Scribner. Jan Kvarnström, President of Esselte Group states: "This is in line with Esselte´s strategy to focus and strengthen our two business areas, Esselte Office Products and Meto. Acquisitions are a way to improve their market positions and create synergies which will increase the value of the companies. In the fast developing office product industry, now is the right time to take pro-active initiatives. By the acquisition, Esselte Office Products will be a leading force in the business creating more value for the Group and our shareholders." The transaction is expected to be completed in the forth quarter of 1998. Financial advisor to Esselte has been Goldman Sachs International. Esselte Group consists of two independent business areas - Esselte Office Products and Meto - which are global market leaders in office products and labeling systems, respectively. The Parent Company, Esselte AB, focuses on creating added value by being an active owner and implementing structural measures to streamline operations. After the divestment of Nielsen & Bainbride, Group sales amount to approximately SEK 11.7 billion and the number of employees totals 7,800 (1997 figures). For further information please contact Bengt Wikander, SVP Corporate Communication, at Esselte AB. Phone +46 8 545 21 900 (switchboard), +46 8 545 21 904 (direct line).