In the future, Georg Fischer only wants to be active in the pipeline and construction technology business. Financier Martin Ebner is taking over the traditional company’s mechanical engineering department in good time.
At Georg Fischer, only products in the piping business and the construction technology sector will leave the factories in the future.
Industrial conglomerates have been an isolated model for years. In Switzerland, corporations such as ABB, Sulzer, SIG and Dätwyler gradually focused on their core business.
Of the former Conzzeta group, which, in addition to plant engineering, was also active in the chemical sector and even in the sportswear business (Mammut), only the machine manufacturer Bystronic remains. And with Georg Fischer, one of the latest listed Swiss conglomerates is preparing to focus.
Get rid of cyclical business activities
Traditional Schaffhausen group Georg Fischer (GF), which has existed since 1802, announced on Friday that it would sell its mechanical engineering division to private competitor United Grinding. At the same time, he also announced the prospect of separation from the Solutions Solutions division, which produces castings made of light metals, mainly for the automotive industry.
In the future, only GF wants to manage the two related divisions, Piping Systems and Building Flow Solutions. These produce pipelines for use inside and outside buildings. Their activities are much less affected by economic fluctuations than mechanical engineering and the foundry business.
Investors became impatient
The Building Flow Solutions division, which looks after indoor pipes and is part of the building services sector, was only created when Finnish competitor Uponor took over. He joined GF a year ago for 2.1 billion francs.
Andreas Müller, CEO of Georg Fischer.
The acquisition was the largest transaction in the long history of the Swiss group and with its completion, GF’s days as an industrial conglomerate were finally numbered. In an interview with the NZZ, CEO Andreas Müller admitted that GF had long had a negative reputation as a conglomerate. Thanks to the merger with Uponor, it is more convenient for the company to take a new direction.
Müller believes he has found an ideal partner for the mechanical engineering division in United Meilt. Both parties are based in Switzerland and specialize in the manufacture of machine tools for the production of high-precision metal parts for aircraft construction, among other things. While GF Machining Solutions is managed from Biel, United Grinding is based in Bern.
The smaller one swallows the bigger one
The main shareholder of United Grinding is the Patinex investment company owned by the Swiss financier Martin Ebner. Patinex is also involved in Geneva-based banking software manufacturer Temenos and real estate group Intershop, among others. The 79-year-old now owns the Helvetic Airways airline with his wife Rosemarie Ebner.
Martin Ebner, financier and majority shareholder of United Grinding through Patinex.
According to Müller, the products from United Grinding and those from GF’s mechanical engineering division are complementary. “There is no overlap,” the manager said.
No jobs will be eliminated as part of the change in ownership. United Grinding employs over 2,000 people worldwide. At GF Machining Solutions there are almost 3,400, of which 1,400 work in Switzerland. This also means that in this transaction it is clear that the one who swallows the most is the one who swallows the most.
Striking mechanical engineering
The purchase price for GF Machining Solutions is 630 to 65o million francs. The final amount will depend on how well the business area is able to achieve a pre-determined profitability target in the coming year.
Either way, Ebner probably hit on a smart moment and got a fairly favorable rating for it. Mechanical engineering is in crisis all over the world. In the first half of this year, GF Machining Solutions only managed to reach a black zero in terms of operating profit (EBIT).
According to Helvetische Bank’s assessment, the parent company could have sold the division for a much higher price two years ago, when things were still going well in mechanical engineering. However investors were enthusiastic about the sale which was now set for Wednesday. GF’s share price rose 15.6 percent to 63.95 francs on Wednesday. “The investors’ long-term wishes for focus are now being fulfilled,” said the Zürcher Kantonalbank.
Foundry sector suffering from the crisis in the automotive sector
The proceeds from the sale will also help GF reduce net debt, which rose significantly following the Uponor acquisition. As of June 30, 2024, it reached 2 billion francs, a year before it was only about 100 million francs.
The planned sale of the foundry division, which is a supplier to the German car industry especially at the moment of the crisis in car manufacturing, should provide additional funds for the group. In this case, too, the company boss is thinking of selling to a competitor.
However, the Casting Solutions division, with its 3,700 current employees (500 of them in Switzerland), is unlikely to go to the Swiss interested party. A strategic buyer from the global environment is more likely to win the contract, says Müller.
Oberland Association of Investors (Zürcher Oberland Verband der Investoren) in response to the news.
The article discusses the significant acquisition of GF Machining Solutions by United Grinding, marking a major shift for Georg Fischer AG (GF), a Swiss industrial conglomerate. Andreas Müller, CEO of GF, acknowledges the company’s previous negative reputation as a conglomerate and expresses optimism about the merger with Uponor as a step toward rebranding and strengthening their market position.
Müller highlights the complementary nature of GF’s and United Grinding’s product lines, emphasizing no job losses will occur post-merger. United Grinding, led by Martin Ebner, is positioned to enhance GF’s mechanical engineering offerings, especially as the industry faces global challenges.
The acquisition, valued between 630 to 650 million francs, reflects current market conditions, with GF Machining Solutions having struggled to achieve significant profits recently. Subsequently, GF’s share prices rose after the announcement, indicating investor support for the company’s strategy to focus and streamline its operations.
