Germany: Rumors about KHS

The market for mechanical and plant engineering in the brewing industry might soon be reorganized. According to unconfirmed sources Salzgitter AG, a German holding company with “core competencies in the production of rolled steel and tube products, as well as their processing and the global trade in these goods” is looking for a strategic fit for its engineering subsidiary KHS.

KHS, which is one of the three worldwide leading companies in the production of beverage filling and packaging machines, was acquired by Salzgitter in 2007 as part of a bigger acquisition of Klöckner Werke. However the fifth of Salgitter’s 5 business units dubbed “technology”, which comprises not only of KHS but also of DESMA Schuhmaschinen and DESMA Elsatormertechnik, two companies for the production of shoes and rubber and silicone moulded articles, never achieved the expected synergies with Salzgitter’s existing business .

First signs of a realignment was the surprise dismissal "on own request" of KHS’ CEO Prof. Dr.-Ing. Matthias Niemeyer at the end of last year (, 25.11.2017) and the following announcement of 305 job cuts at KHS - including 170 at KHS headquarters in Dortmund.

According to people close to the matter, companies interested in Salzgitter’s filling and packaging unit include CIMC Enric Tank and Process B.V. (CETP), a stock company listed on the Hong Kong Stock Exchange. CETP claims for itself "the global leadership as a plant manufacturer and provider of related engineering services in the liquid food, energy and chemical industries" (quote homepage). KHS is indeed a good fit with CEPT’s subsidiary Ziemann Holvrieka headquartered in Ludwigsburg, Germany, and its English sister Briggs of Burton (since 2016).

An alliance of KHS with the Düsseldorf-based GEA Group, which has undergone various restructuring and name changes in recent years, seems also possible. Industry observers could also imagine other alternatives rather than a sale, should Salzgitter want to hold on to its affiliate.

Another possible but less likely combination due to overlapping product lines includes Tetra Laval and its French subsidiary Sidel, which ranks number three in the market of bottling and packaging equipment. Market leader Krones, from Neutraubling, Germany also acts with one hand tied behind its back because both companies operate in similar markets and antitrust problems will most likely prevent a closer cooperation.

At VLB’s 105th Brewing and Engineering Conference, which was held this week in Dortmund, Germany, with KHS as the main sponsor of the event, Prof. E. h. Dr.-Ing. Johann Grabenweger, since 2011 Chief Executive Manager for Sales and Service at KHS, had to step in for his ousted former colleague Niemeyer, and tried to dispel any doubts as to the long-term commitment of Salzgitter towards KHS.

At a factory tour the conference participants could take a look at the new KHS site in Dortmund which was enlarged last year by about 3.600 square meters, when KHS bought from the municipality the rear part of the public street, which divided before the KHS site into two halves.

One of the product innovations shown this week was the Nature MultiPack a packaging solution for PET bottle and can multipacks first presented at Drinktec 2013. The Nature MultiPack avoids additional packaging material by glueing the packing units together instead of wrapping them with cardboard of plastic film.

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