The changing market for optical storage media is prompting consolidation in the industry. German-based world market leader (65%) in replication systems for CDs and DVDs, Singulus Technologies (Kahl; www.singulus.com), plans to acquire 66.3% of its loss-making smaller German rival Steag Hamatech (Sternenfels; www.steag-hamatech.com) for EUR 10.1m and is assuming a EUR 2.2m loan from the seller, Essen-based investor SES Beteiligungs-GmbH. Altogether, Singulus is striving for a stake of at least 75% and plans a EUR 2.40 per share takeover bid for the remainder of Steag´s equity.

The merger of the two companies would produce a new major player with sales of EUR 350m, based on 2005 figures. To illustrate the difficulties this market is facing: the combined figure is considerably less than Singulus´ 2004 sales. Steag blames a more than 40% decline in the overall optical storage media market for its operating loss of EUR 5.5m in the third quarter of this year and cumulative loss of EUR 7.5m in the first nine months. Just before the Singulus plans were revealed, Steag announced a comprehensive reorganisation programme designed to reduce personnel costs by EUR 4m and material costs by EUR 3m annually. Some 75 of the 275 jobs at the Sternenfels site are to go.

For the full year, Steag expects its sales to decline 23% to EUR 115m, with an overall pretax loss of EUR 7m – the optical disc segment alone reported an EBIT loss of 4.6m in the third quarter. At the beginning of 2005, the company had predicted sales of EUR 130m and a loss of EUR 5m. Singulus, too, expects a weaker 2005, due to soft North American and Asian demand for CDs and DVDs. The company is predicting a sales decline to EUR 240-250m, after EUR 440m in 2004. Last year´s EBIT was EUR 73m, but in the first three quarters of this year the cumulative figure shrank to EUR 5.7m from nearly EUR 50m in the 2004 period.