(June 5, 2006) — The world's biggest names in plastics machinery soon will have a new owner — again. A lot of the same questions from the last two times the company has changed hands — plus a couple of times that deals didn't go through as planned — are still on the table.
Will Madison Capital Partners keep Mannesmann Plastics Machinery together or break it up? Will it sell any more assets — after all, MPM just sold small French injection press maker Billion SA. What will be the new owner's manufacturing strategy? How much will its well-known units — Krauss-Maffei, Demag Plastics Group, Netstal and Berstorff — share technology and components? Where will the companies make machines? How much production gets moved to high-growth, low-cost places like China and India?
The answers have pretty consistently been the same as MPM has gone from Mannesmann AG to Siemens AG to Kohlberg Kravis Roberts & Co. Now MPM is about to fall under the umbrella of another owner, and processors and competitors will be curious about what changes are in store.
Yes, MPM has followed a fairly straight and level path, but there have been a few turns and bumps along the way. At one point, Siemens tried to sell MPM to London-based Apax Partners & Co. Ventures Ltd., and Apax turned around and tried to sell Netstal to Swiss billionaire Christoph Blocher. Both of those deals blew up, but not before MPM's chairman resigned. Most recently, the Billion sale could be significant — although it had few repercussions in North America, it showed a willingness by MPM managers to make changes.
Still, status quo under Madison Capital is the message from Munich, and that makes sense. After all, the new MPM is still headed by the same managers. Their strategy is well-known and has been successful despite tough times in the global machinery market.
More important, though, is Madison Capital and whether it will be a different kind of owner than KKR.
The bottom line is that MPM under Madison Capital probably won't look much different from MPM under KKR. Financial investors aren't all exactly the same, but they're different from being family-owned, or publicly traded, or a branch of a big industrial conglomerate. Financial buyers want to improve results and to eventually find another buyer willing to pay more — hopefully a lot more — and then move on to the next company.
Typically financial owners don't reverse course — they just try to make things as lean and profitable as necessary.
With NPE in just a few weeks, Madison Capital and MPM will have a great venue to announce their strategy, reassure customers, reinvigorate the sales and marketing forces, and differentiate MPM (and its units) from the competition. We expect that they will take the opportunity to reinforce the fact that MPM is planning a “business as usual” approach.