On 8 September 2021, the Luxembourg headquartered Flint Group owned by the Koch Industries, announced that it has signed a definitive agreement to sell its XSYS division (formed in January 2021), which specializes in the development and supply of printing plates, sleeves and adapters, and pre-press equipment to the packaging industry, to an affiliate of Lone Star Funds, a global private equity firm. The transaction remains subject to customary closing conditions, including regulatory approvals. The press release states that Lone Star Funds is a leading private equity firm advising funds that invest globally in real estate, equity, credit and other financial assets. Amongst its globally dispersed offices, it does have an office in Dallas, Texas.
Upon closing, the XSYS management team will be led by Antoine Fady as chief executive officer, Dagmar Schmidt as chief operating officer, and Martin Sauer as chief financial officer. Steve Dryden will succeed Fady as CEO of the Flint Group.
“The carve-out we are announcing today represents the next logical step for Flint Group and XSYS,” Fady said. “It will further enable the XSYS business to advance as a standalone, best in class, full solutions provider to the flexographic and letterpress pre-press industries, with tailor-made solutions developed for each market segment and customer type. We look forward to working with Lone Star, whose experience and track record will be of great benefit as we move XSYS forward in this next phase.”
“With this transaction, we will create two dedicated management teams with increased strategic and operational focus,” said Steve Dryden, newly elected Flint Group CEO. “Flint Group becomes positioned to further invest in the structurally growing segments of paper and board, flexible packaging and labels, serviced with our conventional and digital printing consumables. This successful strategy – centred around product and service innovation – enables Flint to grow with customers that value our color proposition by helping them to standardize and reduce their costs.”
“We look forward to working with XSYS, a leading global provider of printing solutions,” said Donald Quintin, President, Lone Star Opportunity Funds. “We recognize not only the resilience of the XSYS business and the diversity of its offerings, but its growth prospects as well. We appreciate the value that XSYS provides its many customers, and have great confidence in the management team’s commitment to realizing XSYS’s potential in the years ahead.”
Goldman Sachs Bank Europe SE and J.P. Morgan acted as financial advisor and Freshfields Bruckhaus Deringer LLP acted as legal advisor to Flint Group. Lone Star was advised by Perella Weinberg Partners and Weil, Gotshal & Manges.
A bit of the back story
Its seems that instead of selling the whole company, Flint has been able to divest XSYS division as a first step which was likely the idea in starting it as a separate division in January 2021. As we reported about three months ago, a Reuters report on 27 May 2021 said that the Flint Group was nearing the completion of a debt refinancing deal seen as a precondition for selling the company, a process initiated in late 2019. However, the Covid-19 pandemic disrupted the sales process. Goldman Sachs’ private equity arm and Koch Equity Development, a subsidiary of Koch Industries, are the current owners.
Flint Group EBITDA data during the pandemic
In our earlier report of 3 June 2021, we wrote that Flint Group has seen its sales decrease in the past 17 months of the Covid-19 pandemic, and guesstimates of its 2020 EBITDA vary from Euro 200 million to Euro 220 million. The group’s EBITDA was Euro 266 million in 2019. It is negotiating with lenders to restructure or amend its financing of Euro 1.7 billion in the next few weeks for perhaps another two years at slightly better rates.
The former US-based Flint Ink became the second-largest printing ink maker globally in 2005 when it merged with XSYS Print Solutions, created in 2004 by combining the ink units of BASF and Akzo Nobel Inks. The larger merger was renamed the Flint Group, with headquarters in Luxembourg.
In 2007 Flint Group acquired Day International, a pressroom consumable supplier. Goldman Sachs private equity and Koch Industries acquired the group in 2014 at a reported valuation exceeding Euro 2.2 billion.
As best as we can make out, from the press release, Flint which has ink manufacturing plants in India, has divested its prepress equipment and consumables business to Lone Star. Flint retains its ink business and from the initial look of it, the Day International offset blanket and the inkjet press businesses.
