The Manroland-Heidelberg might have been the biggest outcome of the financial crisis, instead the fall–out from the aborted deal might now be the biggest consequence. Since talks were called off in October, Manroland has announced a further round of redundancies and a renegotiation of its debts with largest creditor Allianz agreeing on a debt for equity swap which leaves the press manufacturer effectively debt free.

This is far from the case at Heidelberg where the priority has been to secure the liquidity to keep the company in business. It could end up calling on credit lines amounting to €1.4 billion, partly underwritten by the federal and regional governments. Baden-Württemberg president Günter Oettinger was quoted saying: “We must see to it that Heidelberg survives the year.” State aid came to €850 million, the remainder from the banks and will ensure the company can fund its activities until June 2012 at least. Interest payments on these loans are going to be hefty, so at some point Heidelberg will need to refinance them at lower rates, seek to raise money from its shareholders to reduce the debt or take other palliative action. For now though the immediate pressure is eased.

Subsequent to the cessation of immediate merger talks Heidelberg has announced a reorganisation into a new three-pronged business strategy and the squeezing out of sales director Jurgen Rautert. In some quarters his departure is being linked to opposition to the merger, though the real reason are unlikely to be as simplistic.

Heidelberg is now going to organise around three arms: Heidelberg Equipment to comprise the press and finishing equipment; Heidelberg Services and Heidelberg Financial Services. The third arm was already in position, so the change affects the first two divisions. Ceo Bernhard Schreier takes charge of the equipment division and is joined on the management board by Marcel Kiessling who has been running the US operation with technical director Stefan Plenz. The Heidelberg Services division is a further attempt to create a steady cash flow from consumables and consultancy services. The seeds of this have been evident with the expansion of Saphira branded consumables. Heidelberg has argued it has no need to buy manufacturing capability in this area as its purchasing power will enable to command favourable prices.

The element that Heidelberg will need to expand will be in consultancy services, offering advice on the best configurations for presses to setting up production networks around Prinect to improve a printer’s efficiency.

The future for Manroland may yet include some kind of IPO at a future date. Asked whether this was now planned, ceo Gerd Finkbeiner told the Frankfurter Allgemeine Zeitung: “You could interpret it that way.”

He told the paper that the company’s cost base was such that it is anticipating demand will improve only to about 70-80% of the levels of 2007. “At that time were generating €2 billion of sales. We can be effective and profitable with sales at less than €1.4 billion,” he said. The business was running at 50% of its previous capacity, he added, with a further reduction in staff to leave it with 7,000 employees compared to 9,000 a year ago.

The future will involve some form of link with digital printing, an area where the company has had presence since the end of an Oem agreement with Xeikon “Digital will complement industrial printing more and more and we are not there currently. And we want to expand our business in emerging markets.”