European Toner Inkjet Remanufacturers Association Mergers Acquisitions Cooperations

European Toner & Inkjet Remanufacturers‘ Association Mergers <> Acquisitions <> Cooperations in the European Cartridge Remanufacturing Industry Strategy and Process Development by Friedrich W. Becker-Birck / Senior Partner / BECKER-BIRCK CONSULTING PARTNER Gb. R – Hofheim/Germany

European Toner & Inkjet Remanufacturers‘ Association Outline v Scenario v Consolidation: Cooperation / Acquisition / Mergers. JV v Search for Pearls and Snips v Golf Course Deals vs. Professional Approach v Structured Process v Selection Process v Evaluation of Alternatives v Negotiations / Closure / Transaction v Conclusion

European Toner & Inkjet Remanufacturers‘ Association Scenario v Market growth will continue / attracts newcomers in Europe and from Far East v Battle stronger among OEM, Remanufacturers, Private Label v New trends within distribution channels: commercial vs. retail v Increasing, harsh competion + EURO revaluation: prices, margins, profits decline v Consolidation of a fragmented remanufactoring industry v Key factors for survival and growth: profit level,

European Toner & Inkjet Remanufacturers‘ Association Consolidation 1. Cooperation - Lowest degree of consolidation, engagement – no marriage - Joint resources, e. g. R&D, production, logistics, receycling or distribution - Only, if strong synergies - Disadvantage: > transfer of sensitive information > considerable conflict potential - Advantage: good test period for marriage

European Toner & Inkjet Remanufacturers‘ Association Consolidation 2. Acquisition 3. - Requires long-term strategy and strong financial resources - Different solutions: > share deal / 100% or stake / cross-sharing > asset deal (properties, accounts, patents) - Direct marriage, no testing or engagement period, risk to fail - Total influence on future development - Better realisation of synergies

European Toner & Inkjet Remanufacturers‘ Association Consolidation 3. Mergers – Joint Ventures ( JV ) - Merging 2 or more companies and found a bigger, stronger one - Mergers are excellent consolidators - Merger = merge capital and business / give up full autonomy - Merger , if no survival, no successor / shared autonomy - JV = start-up by 2 or more existing companies / investors - JV‘s establish additional players / companies / no

European Toner & Inkjet Remanufacturers‘ Association Search for Pearls and Snips We are facing currently a dramatic restructuring process in Europe: 1. Large conglomerates concentrate on core business and divest side business 2. Banks liqidate industrial parcels of shares and participations 3. Family owned medium-sized companies are sold because there is no successor 4. No good climate for IPO‘s 5. This development has brought Venture Capital and Private Equity

European Toner & Inkjet Remanufacturers‘ Association Search for Pearls and Snips / continued VC and PE Companies are mainly American and British: v Blackstone ( USA ) v Morgan Stanley ( USA ) v Permira ( GB ) v Terra Firma ( GB ) v 3 i ( GB ) 3 i has invested VC in various European companies of the IT and OP industry. The engagement is limited to approx. 5 years

European Toner & Inkjet Remanufacturers‘ Association Golf Course Deals vs. Professional Approach v Golf Course Deals: often based on private contacts v Advantage: vital decisions are taken by handskake, low cost, fast v Disadvantage: > driven by private motives for growth or suvival r. o. i. alternatives > superficial evaluation of effects and > no examination of v Professional Approach: > involve external expert > market insider and/or analyst > higher cost and fees