Siemens-Dematic merger plans take shape

The acquisition of Dematic and two other divisions of Atecs Mannesmann by Siemens was cleared in August by the European Commission which vets all major mergers and acquisitions to prevent monopolies.

Though the deal had yet to be cleared by the US Federal Trade Commission as this issue of HOIST went to press, plans for the future organisation of the two companies were developing.

Dematic, which manufactures mobile, crawler and harbour cranes as well as overhead travelling cranes and industrial handling systems, will be merged with Siemens Production & Logistics Systems Group (Siemens PL).

Atecs Mannesmann, the engineering group of Mannesmann AG, was put up for sale after Vodafone took over Mannesmann earlier this year. Vodafone only wanted Mannesmann’s telecommunications business.

In preparation for the merger, Siemens has established PL as a stand-alone, wholly-owned company called Siemens Production & Logistics Systems AG. After completion of the deal, however, it is likely that a new name will be adopted. This new company will comprise several divisions, including the old PL business of Siemens, as well a divisions for systems, cranes and components, electronics assembly, postal automation and mobile cranes.

The new company will have its headquarters in Nürnberg, Germany, home of Siemens PL, rather than in Dematic’s home of Wetter.

Siemens explained its strategy: “This merger will position Siemens as a world market leader in the rapidly growing field of logistics automation. The company’s comprehensive know-how in e-commerce fulfilment (the interface between receiving orders via the internet and processing them) will make it the world’s largest supplier in the field of logistics automation.

The new company will offer end to end supply chain solutions – including material flow, production and logistics automation – for customers such as postal services, airports, the electronics industry and trade.” Siemens and Dematic believe that they complement each other well, with Siemens as a systems integrator and general contractor with IT expertise, and Dematic as a supplier of conveying equipment, installations and system solutions, including logistics software. The new company will start life with annual sales of E3.8bn ($3.2bn) and 20,000 employees, with Dematic contributing 15,000 of the employees and about E2.3bn of the sales. Chief executive officer is Dietmar Straub, who was previously head of Mannesmann Dematic.

Said Straub: “We are pursuing ambitious targets with this merger. In our increasingly networked world we aim to be the leading innovative solution provider for our customers, complete automation specialists for production and logistics. Mechanical systems and information technology are inseparably linked in the world of modern, efficient logistics and factory automation. Our combined expertise will enable customers to control their logistics processes better and increase their added value. The benefit to our customers is the sole strategic reason for our working together, and it will continue to be the fundamental principle guiding our efforts in the future.” Siemens made an undertaking to Mannesmann when agreeing to buy Atecs that it would not dispose of any of the operations for at least three years. However, the European Commission’s agreement was conditional on it giving up part of its postal automation business. Otherwise, after the acquisition of Dematic, Siemens would have had more than 70% of the European postal automation market. Siemens is already the market leader in this sector, while Dematic is in second place. The Mannesmann Dematic Postal Automation division, which is based in France, is therefore being sold.

Siemens also takes control of two other Atecs companies: VDO, which is being merged with Siemens’ Automotive Systems Group, and Sachs. No conditions were placed on this part of the deal.

Approval is still required from the US Federal Trade Commission which may also require Siemens to give up part of its postal automation business in the USA as both it and Dematic’s Rapistan subsidiary are strong players in the US market.

Meanwhile the European Commission is continuing its inquiry into the proposed acquisition of the fourth Mannesmann Atecs unit, Rexroth, by Robert Bosch GmbH. There are concerns about Bosch becoming too dominant in the hydraulic pump market.