Molins has agreed sell its Instrumentation and Tobacco Machinery (I&TM) unit to G.D of Italy for GBP 30 million (EUR 34.4 million) in order to exit a sector without growth prospects, the UK-based machine maker said.
Spinning off its laboratory equipment and tobacco machinery business would allow Molins to concentrate on growth sectors in packaging machinery, said Molins Chief Executive Tony Steels. I&TM comprises Cerulean, which makes quality control and analytical instruments, and Molins Tobacco Machinery. The two companies employed 354 people as of the end of last year. The sale is subject to shareholder approval at a meeting scheduled for 27 June, Molins said.
In a statement explaining its reasons for the sale, Molins said: “I&TM is heavily reliant upon the tobacco industry, the market for which is not growing. Furthermore, the cigarette making and packing capacities in many regions of the world are in excess of consumption. Together with strong competition in this area of the market, demand for Molins Tobacco Machinery’s new machinery is lower than it has been historically, and typically at prices that deliver profit margins that are lower than in the rest of the Group. The tobacco industry is undergoing a transformation, with the introduction of heat-not-burn products set to progressively displace sales of traditional cigarettes. This change will require significant and timely investments in new product development, as yet not planned within Molins. Cerulean is the market-leading supplier of quality control instruments and its performance has been, and continues to be, strong. Cerulean is, however, subject to increasing competitive pressures.”