Germany's IWKA sheds its packaging division

The packaging arm, which consists of more than 20 companies spanning, Europe, North and South America and Asia, has an enterprise value of around €240 million, IWKA said. The agreement with Odewald & Compagnie, which is subject to approval by antitrust authorities, also includes a "substantially utilised property" belonging to the Packaging division, which will be sold for €17 million. The division went on the block after IWKA completed a strategic analysis first announced in September 2006. The group has been under pressure from Guy Wyser-Pratte, a US investor who buys shareholdings in companies to push through changes that will boost their profitability, to dispose of its packaging arm and focus on its core automation business. IWKA's two other divisions, based on its KUKA industrial robots, are Systems and Robotics. The group is proposing that, once the packaging unit is sold off, it should change its name from IWKA Aktiengesellschaft to KUKA Aktiengesellschaft and relocate its headquarters from Karlsruhe to Augsburg. The rationale for the disposal, explained IWKA's chief executive officer Gerhard Wiedermann, was to draw out the growth potential of the systems and robotics businesses. "That is to say, the sale will release resources and strengths that we need and will use for the development of innovative robot applications and system technologies,"​ he added. The group as a whole serves the automobile and consumer goods industries. According to IWKA, the deal with Odewald & Compagnie takes into consideration the more than 2,500 staff employed by the packaging arm. Employees of the division's German companies, for example, have been offered a "location guarantee" valid for several years and a promise that "there will be no operationally based contract terminations". A report in the German business daily Handlesblatt​ said, however, that employee representatives on the IWKA supervisory board would have preferred a sale to Italian rival Coesia, which had shown an interest in the packaging business. With sales of more than €400 million in 2006, IWKA's Packaging division supplies machines for making, filling and sealing bottles, tubes, plastic containers and boxes for the pharmaceutical, chemical, food, cosmetics, dairy and electronics industries. Among its production companies servicing the pharmaceutical industry are A + F, Hassia and Hüttlin in Germany, Erca Formseal in France, Manesty in the UK, Fabrima in Brazil, Packaging Technologies in the US and IWK Packaging Machinery in Thailand. Their activities range from granulation, pressing and coating to blister packing, boxing, final packing and palletisation. IWKA will book a profit from the sale of its packaging arm, the group noted. As a result, it expects an earnings contribution of at least €50 million from discontinued operations in the 2007 business year.