Board proposes to split the Rieter Group

22 Mar '11

5 min read

The Board of Directors of Rieter Holding AG plans to separate its two industrial activities, the textile machinery and automotive component supply businesses.. The intent is to fully separate the two divisions, both legally and financially, to enable them to operate with greater strategic flexibility and position themselves more clearly in their respective markets.

The Board of Directors will propose to the Annual General Meeting on April 13, 2011, to separate the automotive component supply business from Rieter Holding AG and list it as an independent entity on the SIX Swiss Exchange.

Rieter acquired its automotive component supply business in the mid-1980s, thereby creating a counterweight to its established but cyclical business in the textile machinery sector. Rieter's Automotive Systems division developed steadily for many years against the backdrop of the previously prevailing constant growth rates in the automotive component supply business.

Innovations and numerous acquisitions also contributed to its growth.

Rieter's Textile Systems division has also developed satisfactorily and nowadays successfully counteracts the demand cycles typical of its sector with flexible structures. Rieter has coped successfully with the market-related slump in 2008 and 2009 by systematically implementing restructuring and cost-cutting programs, and achieved the turnaround in the past financial year.

Following the successful, joint development under one roof for decades, both divisions are now globally structured, individually sustainable and ready to be positioned as strong and focused standalone entities on the capital markets.

The proposed separation is also a consequence of Rieter's long-running development goal to establish the financial independence of both businesses. Already today both divisions are operated as separate businesses with their own management teams and organizations. ”The proposed separation and making the divisions formally independent,” comments Rieter's Executive Chairman Erwin Stoller, “is a logical next step that we are now taking.”

The divisions would therefore be better equipped to face the structural changes in the textile and automotive industries as well as the increasing complexity and globalization of both businesses, which will continue in future. The proposed separation is not expected to result in any job losses.

Well placed to be launched as independent companies
Rieter's Board of Directors expects considerable benefits for both activities if they operate as independent, listed companies in the future. One important result will be the higher strategic and operational flexibility of each entity. This will enable both companies to capitalize on further development potential and growth opportunities, e.g. through partnerships or cooperations. The proposed separation offers interesting prospects to Rieter's shareholders. By separating the group into two pure-play listed entities, shareholders will benefit from increased transparency and visibility.

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