Synergy is dead! Long live synergy!
For Mannesmann Plastics Machinery AG, both statements appear to be true—as the company staggers out of a tumultuous first month — only a month! — of ownership by financial group Apax Partners & Co. Ventures Ltd. of London. The latest news was yet another shocker: Top MPM executive Wolfgang “Synergies” Vogl is already out the door. Vogl disagreed with Apax's move to sell Swiss injection press maker Netstal-Maschinen AG, in what has to be record time of two days, over the weekend, after buying all of MPM.
It's chaotic. It's frantic, this current situation at the world's largest plastics equipment maker. Despite the quick sale of Netstal, expect the high rollers at Apax to start issuing news releases extolling the synergies between the five remaining MPM units — Krauss Maffei, Van Dorn Demag, Demag Ergotech, Berstorff and Billion. They'll be touting MPM as a good candidate for an initial public offering in a couple of years.
“Synergy” is one of those squishy words. At times it means something, other times it's a nonsense term used to puff out a press release.
PR flacks love “synergy.” So did Vogl, MPM's urbane former chairman. He used the word whenever he discussed MPM. He insisted that all six MPM units remain intact. But that image of stability began to crack last November when Siemens AG put MPM up for sale, reversing a promise not to make any big changes for three years. Vogl kept insisting that all six companies would be sold together.
Well, they were. On a Friday, July 6, Apax announced it purchased MPM. Then on Sunday, Swiss billionaire Christoph Blocher made his own announcement, that the Swiss nationalist was buying the profitable Netstal unit from Apax.
Upset over the sale, Vogl resigned. His last day with MPM was July 31.
His decision to leave proves Vogl really believed in the synergy of MPM, that it wasn't just happy talk.
To be fair, a top Apax executive, Renate Krummer, has made it clear that Apax now wants to “buy and build” and may use its deep pockets to buy more machinery companies. Netstal was a special case, Krummer said.
OK. But let's examine the supposed synergies. In 3½ years of Mannesmann Plastics Machinery, only two major machinery synergies jumped out:
c A two-platen injection press designed by the U.S.-based Van Dorn Demag and shared with Germany's Demag Ergotech and French press maker Billion.
c A combination injection press and compounding machine developed by Krauss-Maffei and extruder-maker Berstorff.
Vogl also touted things like cooperative marketing and purchasing. While these behind-the-scenes savings can add up, they're not as concrete as an actual machine.
All six — now five — MPM units still are more accustomed to battling each other as independent competitors than they are cuddling up under the MPM umbrella, which was a rather forced marriage to begin with.
Eventually, Apax will want to cash out. That's no sin. But as it prepares for an IPO, Apax has to go beyond bragging about the sheer size of MPM. Annual sales of $1 billion is nice. But the question really is: Does MPM make sense?
Akron-based senior reporter Bregar covers the machinery beat for Plastics News.