Reporting out of Malaysia has been ratcheting up over the last four weeks and the news is big. Let’s get straight down to brass tacks. Pelikan International Corporation Berhad (PICB) is looking to sell a major asset. In a filing with Bursa Malaysia Securities Bhd on May 23rd, Pelikan announced that it, “is currently in negotiations with prospective strategic buyers to dispose substantially all its assets and business interest.” In addition to the Pelikan brand, a number of acquisitions over the years has given PICB ownership or control of Geha, Herlitz, and Susy Card. Exactly which entities are on the table in these negotiations is unclear but speculation and the company’s own filings indicate that it could well be their entire European stationery division. Pelikan International has worked to steadily improve its profitability following an asset streamlining exercise in 2014. This exercise has included the disposal of loss-making businesses and non-core assets. You may recall Pelikan’s most recent divestment, the sale-leaseback of their logistics center back in July 2021 which netted the company a one-off gain of around $44 million which improved their balance sheet, enhanced shareholder value, and yielded a special dividend. Obviously, the sale of their European stationery division would be orders of magnitude larger than anything we’ve seen from the company recently. What all of this means for our beloved inks and fine writing instruments remains to be seen. If you’ll continue reading, I will endeavor to give some historical context and try to tease out just why we may be seeing such a move now.
First, it might be helpful to understand what Pelikan International Corporation Berhad is in relation to the rest of the Pelikan family. Put simply, it is the ultimate parent company of the various Pelikan businesses worldwide, owning the brand as well as the distribution rights. PICB is currently listed on the Kuala Lumpur Stock Exchange (5231.KL). Since its listing, Pelikan International has worked to consolidate the Pelikan business by unifying the brand and its various companies while also expanding the company’s geographic footprint in addition to efforts aimed at increasing brand awareness. Pelikan also acquired a majority equity stake in Herlitz AG in 2010. Both Pelikan and Herlitz enjoy a high degree of name recognition in their core markets. Together, Pelikan, Herlitz, and Susy Card fall under the Pelikan Group GmbH which is headquartered in Berlin and is responsible for the global manufacturing and distribution of school and office supplies as well as fine writing instruments through four manufacturing plants and subsidiaries in twenty-one countries. All told, their combined product range currently features more than 12,000 items.
This would not be the first time that Pelikan’s stationery division has come under new ownership, but it would be a major shakeup in a company that took decades to piece back together. Allow me to provide some brief historical context. After filing for bankruptcy in 1982, Pelikan was broken up and its various divisions were sold off. A Swiss based holding company known as Condorpart AG purchased many but not all of those entities, becoming the majority shareholder of the company circa 1994. Several products remained under the Pelikan brand but were managed independently by various corporations, perhaps most notably Pelikan Hardcopy Holding AG, the company that managed Pelikan’s printer consumables business. Late in 1996, Goodace SDN BHD, a Malaysian company, invested heavily and assumed a majority stake in the company meaning that Pelikan has been a Malaysian held firm ever since. Goodace SDN BHD subsequently changed their name to Pelikan Holding Sdn Bhd. Pelikan Holding was acquired through a reverse takeover by the company and was briefly known as Diperdana Holdings Berhad before changing its name to Pelikan International Corporation Berhad circa 2005. In 2007, PICB was able to once again reunite the Pelikan family, bringing all of the Pelikan branded entities under the PICB umbrella. The result has been a densely nested and complicated corporate structure. PICB controls Pelikan Holding AG in Switzerland who in turn holds Pelikan PBS Produktionsgesellschaft mbH & Co. KG which is the manufacturing and distribution center for Pelikan’s fine writing instruments. Pelikan Holding AG also controls Pelikan Group GmbH which oversees the operations of the brands.
An outline of Pelikan’s complicated corporate structure with PICB serving as the parent to all. Pelikan’s four manufacturing plants are highlighted in red with their Peine/Vöhrum plant that manufactures our fine writing instruments shown on the far left. The Pelikan Group GmbH that oversees the brand is at the top, just to the right of center (click to enlarge)
On April 10th, The Edge, a financial publication out of Malaysia, first reported that PICB was looking to divest itself of assets that were projected to realize a little over $108 million (RM500 million). For those unfamiliar, the currency of Malaysia is the Malaysian Ringgit abbreviated ‘RM.’ Completion of the deal would see PICB exit its core stationery business. Pelikan at the time had not finalized any agreements or presented any proposals to the board of directors. The Edge has quoted sources as saying, “Foreign buyers have expressed interest in Pelikan’s business that is mainly based in Germany.” In response to that article, Pelikan released the following statement in a bourse filing on April 11th;
“The company wishes to clarify that Pelikan constantly explores and evaluates opportunities to maximize shareholder value, including evaluation of mergers and acquisitions, divestment of assets and businesses. During this, the company has received several expressions of interest related to the acquisition of its assets and businesses. In these circumstances, the main objective of the company is to realize transactions which are in the best interests of shareholders and achieve valuations above its net asset value.”
Shareholder value has indeed been steadily increasing in recent months. Approximately 80% of Pelikan’s revenue is derived from its German operations with the remaining 20% coming from operations in Asia, other parts of Europe, and the Americas. Global expansion has been tough for the company, resulting in consistent losses being reported from 2011 through 2015. The company had just returned to profitability when the COVID pandemic hit. That all seems to be behind them now as first quarter earnings this year returned the company back to the black. Pelikan posted a net profit of approximately $1 million (RM4.65 million), compared with a net loss of around $1.33 million (RM6.12 million) the year prior. Despite continued market uncertainties brought about by a multitude of global pressures, Pelikan’s stock has been on an upward climb all year. PICB is currently trading on the Kuala Lumpur Stock Exchange at 82 sen per share (~$0.18). Share values have tripled since September of last year and Pelikan’s market capitalization has subsequently grown to a little over $107 million (RM494.6 million). As of December 31, 2022, Pelikan’s total assets stood at $258,639,479 (RM1.19 billion). Last year, the company reported revenue of approximately $225 million (RM1 billion), posting a pre-tax profit of $10,649,860 (RM49 million). A little over half of that revenue was generated from the company’s German operations. That is a significant improvement from the year prior thanks to the revenue growth generated largely by Latin America and, to a lesser extent, Germany. Pelikan has also been able to pay down a significant amount of debt which has further helped their balance sheet.
Pelikan’s stock price has been on a steady upward climb since September of last year, closing Friday, May 26th, at RM0.82 (82 sen)
Why are we seeing a move to sell core assets now? I think a lot of it has to do with the shareholder makeup of the company which has changed in recent years. Helming PICB as President and Chief Executive Officer since 1997 is multimillionaire and former largest shareholder Loo Hooi Keat (pictured to the right). He is a certified public accountant by training and has a long history in international finance and business management. Loo Hooi Keat currently stands as the second largest shareholder with a 12.62% direct stake and a 5.82% indirect stake in the company. Over the last sixteen months, he has been looking to improve his position, purchasing a large quantity of shares on the open market. Talk of selling Pelikan’s European assets began around 2020 which coincided with the arrival of several new shareholders to the company. Foremost amongst these today is Urusharta Jamaah Sdn Bhd, the company’s largest shareholder since 2018 with a 26% stake. Other prominent shareholders include Ikhlas Capital Singapore Ltd (Tan Sri Nasir Razak) which bought a 9.09% stake in 2019 and Auctus Ventures Ltd and Nominees (Brahmal Vasudevan) which now holds a 4.8% stake. What kind of deal Pelikan will get for its European stationery business remains to be seen but the climbing share price is sure to please investors and a sale is only likely to further increase share prices.
In a sign that things are progressing, Pelikan made another filing with Bursa Malaysia on May 23rd stating;
“The Company [Pelikan] wishes to announce that it is currently in negotiations with prospective strategic buyers to dispose substantially all its assets and business interest. The Company is appointing an investment bank as the principal adviser to advise the Board of Directors on the said disposal and negotiate terms of the transaction. The Company will make the appropriate announcement(s) to Bursa Malaysia Securities Berhad in accordance with the Main Market Listing Requirements once the negotiations are finalized and definitive agreements are signed.”
No definitive agreements have been signed to date nor has a prospective buyer been identified. Pelikan’s above statement regarding “strategic buyers” has fueled speculation that the potential buyer may well be an existing market player. One such name that has been floated is the Italian group Fabbrica Italiana Lapis ed Affini S.p.A (F.I.L.A.). F.I.L.A. has global operations and is strong in the school sector, one of Pelikan’s core strengths. That company has worked over the last several years to acquire and consolidate brands such as Dixon, Ticonderoga, Canson, Daler-Rowney, Lyra, and Arches to name just a few. Could Pelikan and Herlitz be the next brands that F.I.L.A. adds to its portfolio?
A new buyer could be just what Pelikan needs to infuse new life and a little extra capital into what has been a brand struggling to return to profitability until recently. It’s fine writing instruments division is in sore need of new, modernized production facilities and a cash flush buyer could fill that need. Pelikan has weathered many changes in nearly two centuries of business yet has survived these past 185 years largely intact so I wouldn’t count them out. That doesn’t mean a potential sale isn’t fraught with significant downsides for consumers of the brand though that remains to be seen. When a company places shareholder value above customer experience, profits may rise but customers will suffer. Still, there is a lot of heritage and brand recognition/loyalty out there, built over those 185 years, that it would behoove a new owner to safeguard. This is a developing story and I will post more as new details emerge which I expect to occur once negotiations are finalized, and definitive agreements are signed.
References
- Annual Report 2005. Pelikan International Corporation Berhad. Last accessed 5/27/23.
- Annual Report 2007. Pelikan International Corporation Berhad. Last accessed 5/27/23.
- Annual Report 2022. Pelikan International Corporation Berhad. Last accessed 5/27/23.
- Braithwaite, Andy. “Pelikan in sale talks.” OPI. May 23, 2023. Last accessed 5/27/23.
- Braithwaite, Andy. “Pelikan comments on sale rumours.” OPI. May 23, 2023. Last accessed 5/27/23.
- Corporate Announcements to Bursa Malaysia Securities Bhd. General Announcements. Pelikan International Corporation Berhad. Last accessed 5/27/23.
- “Pelikan in assets sale talks with strategic buyers.” The Malaysian Reserve. May 23, 2023. Last accessed 5/27/23.
- “Pelikan International in talks with prospective buyers to sell major assets, business interest.” The Edge Malaysia. May 23, 2023.
- Vasu, Priyatharisiny. “Pelikan says it received several ‘expressions of interests’ in its assets, businesses.” The Edge Malaysia. April 11, 2023. Last accessed 5/27/23.
- Zainul, Intan Farhana. “Pelikan said to be on verge of major asset sale.” The Edge Malaysia. April 17, 2023. Last accessed 5/27/23.
The challenges to come were hinted when they released the M205 Petrol Marbled without the officially advertised chrome cap ring…and then passed it off as an oversight in marketing pics. Such an obvious mistake didn’t sound likely given the high caliber of the company involved. It was indicative of deeper changes and challenges.
As a die hard fan, I hope they survive. Thanks for the post!
We’ve certainly seen a few signs of things going awry these last few years. Sad that the culmination is this. Not sure who would buy a company that has struggled to be profitable for so long now and I can only imagine one who would would look to cut corners to increase profits as much as possible. I don’t think the consumers are going to win in this deal, no matter what.
Things have improved significantly in the last two years though and Pelikan is currently profitable again. This just seems to be a good time for the owners to sell a company that never really had anything in common with their core business for a good price. Performance on the stock market has been great this year, it seems they managed to make the company profitable again and debt has been significantly reduced.
I agree. If there was a time to sell, now would make the most sense as far as the shareholders were concerned. I have always found it so backwards that enriching the shareholders supersedes the customer experience. Should be the other way around as far as I’m concerned but what do I know?
Should we assume that the Pelikan hubs are likely moot given these developments?
I would not presume that at all. I would think operations continue along as normal for the time being. I don’t foresee how this news changes that. My expectation is that the Hubs event will continue as scheduled.
Josh, Chinese investors have been throwing a lot of money buying up Malaysian-listed entities since the Najib Razak assumed the Malaysian premiership. It is either an opportunity for a Chinese (privately owned or CCP-linked) to acquire a stake in an EU-based company like Pelikan which gives them an opportunity to have a stake in an EU based supply chain component company. Or they pump in “hot money” to raise the Pelikan share market price on Bursa Malaysia – take the profit and run. It’s such a common phenomenon in Malaysia nowadays.
My hope is that whoever buys up Pelikan – they’d keep the fine writing department alive !
I admit ignorance with regards to what transpires in the Malaysian markets therefore I have to take your word for it. I certainly hope this is not a “take the profit and run” scenario. Depending on what is negotiated, I would hate to see the fine writing instruments division fall into disarray over a cash grab.
I don’t think a Chinese investor would be acceptable in their main market (Germany) and doubt it would work for the fine writing department either.
I would worry about the intentions of a Chinese investor. I can’t see protecting the brand and its heritage as being high on their list of priorities.
I think it’s kind of obvious why Loo Hoi Keat wants to sell a majority brand. We are moving into a completely digital world. Notes are taken digitally, computer tablets can be used to hand write notes, the ReMarkable tablet is a great replacement to ink on paper. People use their phones to take notes/photos of things they would normally have written down.
There is less of a need for writing instruments, let alone expensive ones.
Pelikan needs to look at how they can modernise their technologies for the digital world.
It is true that we are a solidly digital world and only getting more so. That very reason is what killed the M300 product line. Still, writing is not dead and I think that there is a path forward for fine writing instruments. Pelikan certainly has a large fan base. Hopefully clear vision and enough capital to execute that vision can put the company back on solid footing.
At least the school system in Europe and especially Germany still emphasizes hand writing and currently there is an increasing trend to move even further away from all digital approaches (based on research and the increasing problems with AI), so I’m not convinced that this is an issue. The fine writing market was never more than a niche market anyway and has never been that important to Pelikan overall.
Yes, a very different and much more pen friendly climate overseas than here in the USA.
…am getting too old. But will not jump to conclusions. Happy to have gotten the traditionally made while I could…can only hope for the best.
I think that this is the best approach any of us can take. There are too many uncertainties right now and its best to wait for more definitive information before jumping to too many conclusions.
This makes me ask myself: should I grab as many Pelikan pens as I can right now before they sell out and the company becomes something different than the Pelikan we know and love?
Personally, I would resist that impulse since the future is so uncertain. My personal approach is to carry on business as usual pending any more substantial developments. Of course, you have to do what you think is best.
and a great sadness covered the land…. 🙁 Hopefully the worldwide markets are enough to keep fine writing afloat.
I do hope that will be the case. I don’t see this move as “doom and gloom,” at least not until more details emerge.
Fine writing has a purpose, that purpose needs to be sold. My dad dies two years ago and couldn’t write worth a darn, but his writing was his. Scraps of paper with his handwriting are what I have left. You can’t duplicate or reprint a note or a letter. Each one is personal.
Companies have to wake to that and stop trusting the bean counters to tell them where to invest. I’l like to go to a Hallmark store and choose some new stationary paper and envelopes. That is a thing of my youth.
I think people are waking up to things that a personal and not disposable. Pelikan and other pen companies need to embrace the future and give us what we need. Vinyl records are coming back, so should handwriting and and good pens.
I very much agree that pen company’s need to sell not only their product but why their product is still relevant in the digital age. You don’t see enough of that at all.
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While I appreciate tradition, I have to be real. I don’t buy many modern Pelikan pens because they look cheap and boring. I don’t like demonstrators and refuse to pay Pelikan’s asking. I did just purchase a Stresemann 400, and finding this article, I’m glad I did. This pen is worthy of the price I paid and now the 400s have 18K nibs, at least this one. There is nothing else in their offerings I want. Most all my Pelikans are vintage.
I would love to see them get innovative and bring out some new designs piston filler or not. Their ink is great, dry, but wonderful for taming overly wet pens. The problem is how to get customers to part with money frequently. The answer might be with disposables. How do you get people to buy more stuff. For me, I have over 500 bottles of ink and recently added 60 plus bottles of vintage ink. Ink is a tough sell. Maybe paper? There is not enough good paper on the market for my tastes.
I think the secret for the new owner is to start with why. Why do people write in a digital world? I think pushing the benefits of handwriting would sell pens, ink, and accessories. People should not have to pay to learn or relearn cursive. Pelikan should focus their Hubs on writing. One thing the Hubs need to have is a presentation by the company on their history and pens, giveaways are nice, but educate me as to why I need more of their pens. Make me proud to be a Pelikan owner. Make Pelikan more than the latest heritage brand to be sold off and squandered. Parker isn’t what it was Sheaffer is a disaster. Cross is in a tough spot. Lamy is holding but they make their own nibs and control their products well.
China is starting or continuing to produce some really good pens at cut-rate prices. It’s time others fought back. You can be cheap or you can have loyal customers, but not both.
I think that there is a lot more value to be found in shopping for vintage Pelikan’s. I too would love innovation but that is not in their DNA over the past few decades. The question now becomes, how will the new owner approach the fine writing division? This could be just what the brand needed or the end of the line. Only time will tell.
Call me cynical, but I pretty much believe that all of their current stock will soon be classified as vintage. Well, I appreciate the pelican hubs, they don’t do enough to pump the brand in my city.
I just got my M405 Stresemann yesterday, and really like it other than some hard starts. I don’t think a pen of that price should have hard starts using Pelikan 4001 Ink.
I don’t think Pelikan does enough to pump the brand in any city. Congrats on the Stresemann. Great pen. The hard starts should not be present. Are the tines aligned on the nib?