Heidelberg has announced its decision to sell the Gallus Group business unit as part of the former’s systematic realignment strategy.

Gallus Group is being sold to Swiss packaging business, benpac holding, as Heidelberg focuses on its core business of sheetfed printing while facing up to the challenges created by COVID-19.

Following the sale, Heidelberg and benpac will work together closely on the Gallus Labelfire digital label press. Heidelberg will continue supplying the digital printing unit (DPU) and consumables for the press.

Heidelberg will also continue to manage the sales and service of the Gallus portfolio in close cooperation with benpac after the takeover. Heidelberg said this ensures that Gallus customers will continue to benefit from its service network.

“We are selling our narrow-web rotary and rotary flexographic printing activities to focus more closely on innovative solutions for the entire printed sheet value chain,” Heidelberg CEO Rainer Hundsdörfer said.

“We will be retaining our in-house digital expertise and, by collaborating with benpac on the Gallus Labelfire, we will also be making further progress with the digitisation of conventional presses. At the same time, we will remain a major supplier on the growing label market with our sheetfed offset presses.”

The transaction will see benpac assume ownership of Gallus in five sites with a total of some 430 employees in Germany and Switzerland.

With an agreed purchase price of about €120 million, Heidelberg is expecting the deal to generate earnings in the mid two-digit million-euro range. The parameters will be finalised at the time of closing.

The sale, which still needs to be approved by the relevant bodies and is subject to other condition precedents, is set to take effect before the end of 2020.

“Our aim is to ensure the long-term financial stability of Heidelberg, and all the measures since our transformation started in March this year have been geared toward this objective,” Heidelberg chief financial officer Marcus Wassenberg said.

“Selling the Gallus Group is another key part of our realignment and follows on from the successes we have achieved so far during the transformation process. This further major boost to our liquidity and Group equity will be a big help, especially during the coronavirus crisis.”

benpac holding CEO and chairman Marco Corvi said the acquisition of the Gallus Group is of great strategic importance for the business.

“It completes our overall range in the packaging sector and ensures that the entire value chain is covered. The expertise of the Gallus Group will contribute to the further development of our group of companies,” Corvi said.