Gildemeister and Mori Seiki to combine activities in Europe [updated 28/7/2011]

Mori Seiki currently holds 20.1% of the shares of Gildemeister AG, whose selling/service organisation is DMG, with the European joint venture company being a 50/50 activity. The new holding company will manage all the sales and service activities of the European DMG/Mori Seiki companies. The German market will continue to be managed by DMG/Mori Seiki from Stuttgart, according to the Gildemeister AG release. The cooperation in Germany and Europe comprises the sale and all technical services, such as customer service, training courses as well as technical support. In the future, 17 national companies – responsible for 37 European markets – will be brought together in DMG/Mori Seiki Europe. Following the successful integration of the two companies sales operations in numerous other markets – such as Asia, the USA and Japan – the market in Germany and the remaining European markets will now be developed jointly. In selected countries (Poland, Russia, Austria) the merger is still subject to approval by the authorities. The cooperation in Germany and Europe will start at the beginning of September, with a total of about 1,350 employees. Of these, 600 employees work in Germany and 750 in other European countries. Comment from Mori Seiki, dated 27 July, explains that: "In the European market, DMG holds a strong presence. By extending the joint sales and service to Europe, [Mori Seiki] intends to expand its sales of products through DMG's strong sales network and wide customer basis. Furthermore, in high value added machine tool markets, which is the main target of [Mori Seiki's] product strategy, offering cutting technology, software, education and good maintenance are expected to play a key role in the future. DMG's direct sales network allows face-to-face contact with customers." It further explains that, in Germany, DMG has obtained approval from German FCO (Federal Cartel Office) to integrate [Mori Seiki's] sales and service function into DMG / Mori Seiki Germany – this has seen a name change to DMG Stuttgart Vertriebs und Service GmbH, a company 100% owned by DMG. The new activity will start operation around the beginning of September. Mori Seiki says it will keep several functions, such as service, parts, engineering, education or administration, with in Mori Seiki GmbH (100% owned by the Mori Seiki) and mainly support the business of DMG/Mori Seiki Germany in the future. Outside of Germany, assuming that necessary governmental approval in related countries are obtained, Mori Seiki and DMG plan to establish a joint venture in Switzerland (tentative Name: DMG/Mori Seiki Europe). The existing sales and service subsidiaries of Mori Seiki and DMG will be combined by region and affiliated under the new Swiss company as 100% subsidiaries. The share holding ratio and the composition of directors in the new joint venture are in discussion between the two parties. At the moment, details such as the transfer price of the assets in Germany or the share holding ratio in the new joint venture in Switzerland remain undecided, the release says. Machinery understands from the release that further announcements will be made, as official/regulatory business in the various European countries progresses. Note: the 28/7/2011 update added details about Mori Seiki's shareholding in Gildemeister, the 50/50 nature of the joint venture and official comment from Mori Seiki.