Breaking news this morning: ACM Project Management has sold a 44% minority stake in Leica Camera AG. ACM previously owned approximately 98% of the shares of Leica Camera AG and has, on several occasions over the last several years, attempted to take the company private with 100% ownership. I believe that one of the reasons for Leica's current success is Dr. Kaufmann/ACM's long-term strategy in the face of the global economic meltdown. While others companies were concerned with maintaining short-term shareholder value by laying off workers and slashing R&D budgets, Leica grew its workforce by more than 10% and double-downed on R&D. Indeed, looking in hindsight, this was a logical and extremely smart move, but at the time, I'm sure it was deemed very risky. My hope is that Blackstone Group allows Kaufmann and the Board to continue running Leica with its current strategy for continued success, and that the extra infusion of capital provides for much-needed expansion to manufacturing.
The press release follows:
Leica Camera gains strategic investor in Blackstone, ACM Projektentwicklung GmbH will remain the majority shareholder
London, Solms: The Blackstone Group (NYSE: BX) and ACM Projektentwicklung GmbH today announced they have agreed a strategic partnership whereby investment funds advised by Blackstone will acquire, indirectly through a holding company, a 44% minority stake in Leica Camera AG (“Leica”), to support Leica’s international growth plans. ACM and Blackstone have agreed that the value of the transaction will not be disclosed. The transaction is subject to regulatory approval and is expected to close in Q4/2011.
Headquartered in Solms, Germany, with 1,150 employees, Leica has a long tradition of manufacturing premium-segment cameras and sport optics products. Over the past sixty years, Leica has grown to become a leading German brand and is seen as the epitome of German engineering excellence and an ambassador of the “Made in Germany” quality seal. Leica has become synonymous with the best tools of the trade, blending hand-crafted quality with a dedication to precision mechanics and producing the best optics the industry has to offer.
Building from this highly successful market position, Leica now endeavours to expand the business into new markets. Blackstone is seen as the right partner to support Leica management to achieve these goals in light of its global footprint, in particular with significant operations in Asia, and its development capital and strategic expertise.
Dr. Andreas Kaufmann, Chairman of the Supervisory Board of Leica commented on the transaction: “With Blackstone we have gained an experienced and internationally established strategic partner, which also understands and appreciates the established brand philosophy and business model of Leica. Following the successful turnaround of the business and record sales last year, we are now focused on the continued development of the brand, its products and our growth plans into new markets such as Asia, South America and the Middle East. ACM has no plans to sell more shares in Leica Camera AG. Our long term strategy is to accompany Leica Camera in its continued expansion worldwide.”
Axel Herberg, Blackstone Senior Managing Director, said: “Leica is deeply rooted in Germany’s history and we would like to help grow the business in a manner that is true to this heritage, ensuring that the entrepreneurial spirit that makes Leica unique is preserved. We are very excited about supporting Leica to secure long-term commercial relationships, specifically in emerging markets, and help strengthen the company’s operational and retailing capabilities globally.”
Leica Camera AG concluded the 2010/2011 financial year with record sales of € 248.8m. The Hessen-based traditional manufacturer of cameras and sport optics products increased turnover by 57.2 % compared to the previous year (€ 158.2 m). The operating result (EBIT) increased almost six fold: it rose from € 7.4 m in 2009/2010 to € 41.6m. The consolidated surplus also took a positive turn: at € 36.3 m it is more than eleven times the previous year’s figure (€ 3.2m). The sales increase is attributed above all to the strong demand for the two camera systems, Leica M and Leica S.