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Added value through focus: How the spin-off of the paper business is intended to further increase the company's value and its attractiveness on the capital market.
The spin-off of the paper business from the chemicals and packaging activities of CPH Chemie + Papier Holding AG has created two focused companies in their respective markets from the historically evolved industrial conglomerate: The growth-oriented, high-margin Chemistry and Packaging divisions will remain in the listed CPH Chemie + Papier Holding AG, which will now operate under the name "CPH Group AG". The more volatile paper business will be continued together with the real estate in Perlen in the newly founded "Perlen Industrieholding AG", whose shares can be traded over-the-counter on the OTC-X platforms of Berner Kantonalbank and LPZ-X of Bank Lienhardt & Partner.
IFBC acted as exclusive financial advisor to the CPH Group throughout the entire transaction process. In particular, IFBC developed a suitable transaction structure, prepared the valuations and provided support with the equity story and financing. Together with the management of the CPH Group, the opportunities and risks of the spin-off were identified and the course of action was determined to ensure a successful future for both companies.
In the following interview, Gerold Brütsch, CFO of the CPH Group, shares his thoughts on this forward-looking step, which is intended to further increase the company's value and enhance its attractiveness on the capital market.
CPH Group AG's two divisions develop and produce molecular sieves and deuterated solvents for healthcare and industrial applications (Chemicals division) and pharmaceutical packaging films (Packaging division). The key value drivers in this business are the long-term megatrends of demographics, health, energy and mobility. The Chemicals and Packaging divisions are well positioned worldwide to benefit from these megatrends and further increase their global market shares.
For years, the paper business has been in a structurally declining market due to digitalization and in a highly competitive predatory market. With its regional volume strategy, it is well positioned in the market for newsprint and magazine paper as well as for waste paper recycling.
CPH Chemie + Papier Holding AG, a listed industrial conglomerate with a long history, consisted of three independent divisions operating in different markets with very different characteristics. On the one hand, the growth-oriented and high-margin chemicals and packaging activities, and on the other, the more volatile paper division, which operates with a cost leadership strategy in cut-throat competition. These differing characteristics made it difficult for the capital market to assess and value the industrial conglomerate and reduced the attractiveness of the CPH share. The spin-off of the Paper Division will make CPH Group AG, which is now focused on international growth markets, more predictable and attractive to the capital market.
The operational business of both the Chemistryand Packaging divisions of CPH Group AG and the Paper division of PerlenIndustrieholding AG was not affected by the planned transaction. The marketpresence has not changed and the businesses will continue to be managed by theexisting employees under the established brands of Zeochem (chemicals) and PerlenPackaging (packaging) in CPH Group AG and Perlen Papier (paper) in PerlenIndustrieholding AG. The reorganization of the two holding structures will notresult in any changes for the customers and business partners of the independentlyoperating companies.
CPH Group AG is a stable and profitableindustrial company focused on international growth markets, with divisions thatoperate independently in the marketplace. Thanks to its technologicalleadership and innovative products, CPH Group AG offers its customers clearadded value and thus occupies a leading position in its relevant marketsegments.
Global expansion offers many opportunities, but also requires careful planning and a comprehensive strategy. I am thinking, for example, of existing and future customer needs and the competitive situation in these markets. It is also important to get to know the local conditions and needs as well as the legal and regulatory requirements. In emerging markets in particular, this also includes capital movement, currency and financing issues. Local partners and distributors who know the market well and can provide support are helpful here.
The CPH Group is constantly investing in the development of new products and solutions and in the optimization of processes in order to achieve market leadership in the chemical and packaging sectors. To generate added value for its customers, the company operates development centers in Switzerland, Germany and the USA. These are responsible for continuous innovation and customer-oriented product development.
Sustainability is a core issue for us. As a significant step, the shareholders have enshrined long-term and sustainable value creation in the Articles of Association. The Board of Directors and Group Executive Management of CPH Group AG have defined a sustainability strategy and aligned their governance accordingly. We have the ambition to decarbonize our production and reduce emissions along the entire value chain to net zero, provided we remain competitive. We are also continuously developing our sustainability reporting in line with European sustainability standards, including a focus on climate protection.
We are convinced that Perlen Industrieholding AG can develop better as an independent company. As I said, the paper business has been in a structurally declining market for years and is subject to fierce cut-throat competition. As paper offers few opportunities for differentiation, earnings trends are volatile depending on the level of existing overcapacity. As we have shown in the past, we are convinced that good money can also be earned over the cycles in the future.
With its regional volume strategy, our paper business is well positioned in the market for newsprint and magazine paper as well as for waste paper recycling. Thanks to the pursuit of a cost leadership strategy, long-term customer relationships, a strong balance sheet and excellent expertise, it should be able to hold its own better in the market as part of the consolidation and thus generate free cash flows over the cycle in the future. In addition, Perlen Papier AG already operates almost CO2 -neutrally and thus differentiates itself from the competition. With this strategy, Perlen Papier AG, as an independent company, is in a position to cope with the volatility of the paper business with a downward trend in demand and continue to generate value.
Regular dividend payments are planned for shareholders, which are linked to business performance, free cash flow and available liquidity.
As a family business in its seventh generation, the transaction process was also accompanied by emotions. Throughout the entire process, the burden on Group Management was high, as – in addition to day-to-day business – a wide variety of tasks had to be completed in a short space of time. In addition to the usual issues associated with such transactions, such as share registers, valuations, financing, communication, listing, pension funds, accounting, auditing and taxes, there were also issues with less experience. For example, the organization of over-the-counter trading and the associated market making as well as the legally compliant spin-off of the 640,000 m of2 agricultural land into Perlen Industrieholding AG and the planning and implementation of the operational unbundling, which can only be completed by the end of 2025, particularly with regard to the IT systems.
The CFO plays a central role in the financial health and strategic direction of a company. Through effective financial management, risk control and strategic planning, the CFO, together with his or her finance teams and in close collaboration with the CEO, makes a significant contribution to the long-term success of the company.
In addition to the specialized expertise and extensive experience with similar projects of the IFBC consultants involved in the project, I most appreciated IFBC's professional approach and pragmatic solutions. The process was always well managed and we always received competent and solution-oriented support for our issues.
Gerold Brütsch, B.Sc. in Business Administration, Certified Public Accountant, US Certified Public Accountant, born 1966 and Swiss citizen, has been with CPH Group AG since 2021 and CFO since January 1, 2022. Gerold Brütsch has also been CFO of Perlen Industrieholding AG, Perlen, since 2024. From 2000 to 2021 he was Group CFO, Head of Corporate Center and Deputy CEO of Starrag Group Holding AG, Rorschacherberg; from 1997 to 1999 he was Head of Finance, Controlling, IT and Administration at Müller Martini Buchbindesysteme AG, Felben-Wellhausen; and from 1990 to 1997 he was a client manager and auditor at KPMG in Zurich and San Francisco.
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