Leica Camera gains strategic investor in Blackstone

[Guy Mancuso]

Press release
19 October 2011


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.

About Leica Camera AG
Leica Camera AG is an international premium manufacturer of premium cameras and sport optics products. The legendary status of the Leica brand is based on a long tradition of excellence in the production of lenses. In combination with innovative technologies, Leica products continue to this day to guarantee superior image quality and visual perception. The headquarters of Leica Camera AG are located in the Hessen town of Solms, with a second production site in Vila Nova de Famalicão, Portugal. The company is active in 54 markets internationally and operates branches in England, France, Japan, Singapore, Switzerland, South Korea and the USA. New, innovative products have been the driving force of the company’s growth in recent years. Further information and images are available at www.leica-camera-extranet.com (login: press, password: turnaround2011) or at www.leica-camera.com.

About Blackstone
Blackstone is one of the world’s leading investment and advisory firms. We seek to create positive economic impact and long-term value for our investors, the companies we invest in, the companies we advise and the broader global economy. We do this through the commitment of our extraordinary people and flexible capital. Our alternative asset management businesses include the management of private equity funds, real estate funds, hedge fund solutions, credit-oriented funds and closed-end mutual funds. The Blackstone Group also provides various financial advisory services, including financial and strategic advisory, restructuring and reorganization advisory and fund placement services. Further information is available at www.blackstone.com. Follow us on twitter @blackstone.

Contact:

Leica Camera AG:
Cardo Communications GmbH / Dirk Große-Leege, Holger Thurm / Telephone +49 (30) 240 87 62-0
[email protected]

Blackstone:
CNC Communications / Mirko Wollrab / Telephone +49 (69) 506 03 75 79 /
[email protected]
Blackstone / Helen Winning / +44(0) 207 451 4344 / [email protected]

 

[dhsimmonds]

This is an interesting move!

Does this mean that Leica are stretched financially I wonder? It is well known that they are struggling to keep up with demand for M9 and M lenses which could mean a leap of faith by Kaufman to invest in expansion of facilities and people. A financial partner is perhaps the answer?

Also the spectre of Kodak's demise threatens their supply of sensors for the M9 and S2.......not only for Leica of course. I daresay Kodak may find a buyer for the sensor division, but Leica have been here before with their DMR sensor supplier! That resulted in quite a hiccup for both Leica and owners of DMR backs.

 

[fotografz]

This is an interesting move!

Does this mean that Leica are stretched financially I wonder? It is well known that they are struggling to keep up with demand for M9 and M lenses which could mean a leap of faith by Kaufman to invest in expansion of facilities and people. A financial partner is perhaps the answer?

Also the spectre of Kodak's demise threatens their supply of sensors for the M9 and S2.......not only for Leica of course. I daresay Kodak may find a buyer for the sensor division, but Leica have been here before with their DMR sensor supplier! That resulted in quite a hiccup for both Leica and owners of DMR backs.

FYI, there wasn't a hiccup with the sensor supplier for the DMR, it was with Imacon after being merged with Hasselblad ... Imacon nor Hasselblad makes sensors.

-Marc

 

[jonoslack]

This is an interesting move!

Does this mean that Leica are stretched financially I wonder? It is well known that they are struggling to keep up with demand for M9 and M lenses which could mean a leap of faith by Kaufman to invest in expansion of facilities and people. A financial partner is perhaps the answer?

I really don't think they're stretched financially (I thought they were doing really well) - seems to me that it's as simple as Mr Kaufmann getting some of his money back (all of?) whilst still keeping control.

They certainly are struggling to keep up with demand for M lenses (not so sure about M9s). But perhaps that's the right state of affairs with this kind of 'luxury' product.

 

[dhsimmonds]

You are quite correct Marc about the detail. It was of course Imacon who made the processors using Kodak sensors. It was a shame really as I had hoped that the DMR concept had some mileage for updating as sensor/processor technology developed. However I have always thought that Hasselblad/Imacon's attitude at the time may have shaped Kaufmann's product direction towards the S2.

Jono you may also be right, but time will tell. I can't fault Dr Kaufmann's timing in going for a financial partner just as Leica are back in profit. We don't know how the other companies in his portfolio are performing of course. He would have certainly sold his 44% of shares in Leica at a profit!

However, the fact remains that Kodak are in deep trouble and that could mean problems for the mainstay of Leica's camera production?

 

[PeterA]

Leicca is now on an IPO as end game.

The levers to maxiise value to be pushed from here are:

1. Expanded sales into Asian 'growth' economies; employing
2. Brand Name cachet - Many Asians love brand names - the more exclusive the better ( good fit with Kauffman's stated business positioning and philosophy
3. In order to d this you need access to as much equity capital, debt as possible (at the best rates possible ) enter GREAT fit with a capital provider ENTER BLACKSTONE - much of whose equity capital comes from longer term patient investors in private equity BUT ALSO- Blackstone clips the ticket on all the capital expexpertise it will provide via debt facilities, working capital facilities and associated STRUCTURES as well as investment baking expertise - So Leica current majority shareholder gets FINANCED out of control over TIME...

A great deal for Blackstone IF the growht strategy is going to work

which means

Any strategic acquisition that 'fits' with the (now) new group is buy able IF it makes Leica bigger - BECAUSE - The end game for Leica is now eventually a public listing or IPO. Standard private equity strategy.

In fact IF Leica were NOT to make any significant acquisitions over the next two years - it would be signs of a dud trade on the part of Blackstone.

Expect to hear of partnerships, mergers and acquisitions quite regularly as of now. the IPO will have to be a lot larger than Leica today - even accounting for the increase in scope of business into expanding Asia.

FANTASTIC NEWS!!!

Pete

 

[fotografz]

You are quite correct Marc about the detail. It was of course Imacon who made the processors using Kodak sensors. It was a shame really as I had hoped that the DMR concept had some mileage for updating as sensor/processor technology developed. However I have always thought that Hasselblad/Imacon's attitude at the time may have shaped Kaufmann's product direction towards the S2.

Jono you may also be right, but time will tell. I can't fault Dr Kaufmann's timing in going for a financial partner just as Leica are back in profit. We don't know how the other companies in his portfolio are performing of course. He would have certainly sold his 44% of shares in Leica at a profit!

However, the fact remains that Kodak are in deep trouble and that could mean problems for the mainstay of Leica's camera production?

I'm sure Leica is aware of this development regarding Kodak. Kodak is not the only maker of sensors, and I'm sure Leica is a bit fed up with Kodak anyway, given the cracked sensor issues. So it would not surprise me if Dalsa supplied the next round of Leica digital sensors ... after all they are a leading independent maker and a major innovator of both CMOS and CCD technologies.

-Marc