Asset Value Investors (AVI), manager of AVI Global Trust, has published an open letter to the Supervisory Board of Gerresheimer AG, urging urgent action to restore shareholder value following a string of profit warnings and a sharp deterioration in market confidence.
AVI, which owns a 3.5% stake in Gerresheimer through AVI Global Trust (1.2m shares), is calling for the appointment of new financial leadership, the establishment of a dedicated capital allocation committee, and a swift exit from the underperforming Moulded Glass division. The investment manager argues that these steps are essential to rebuild market trust and unlock the full value of Gerresheimer’s high-quality Containment Solutions & Delivery Systems business.
Gerresheimer’s share price has declined by 56% from its 52-week high and, according to AVI, trades at a significant discount to its sum-of-the-parts valuation. The trust highlights the disparity in valuation between the company’s high-margin healthcare packaging operations and its lower-multiple Moulded Glass segment, suggesting that the latter is weighing down the overall group valuation and contributing to a “conglomerate discount.”
AVI also raised concerns over Gerresheimer’s recent €800m acquisition of Bormioli, which has added significant leverage to the balance sheet (net debt now stands at 4.1x EBITDA). The manager questioned both the due diligence and valuation behind the deal, particularly as recent earnings guidance suggests the business is underperforming.
AVI is urging the board to lay out a refreshed strategy and recovery plan at a capital markets day later this year. It believes swift action is critical, especially given reports of private equity interest in Gerresheimer.
AVI stated its intention to continue engaging with the board and other shareholders to help unlock the company’s intrinsic value. You can click here to read the AVI’s open letter to Gerresheimer.
[QD comment MR: AVI’s public intervention marks a significant escalation in its engagement with Gerresheimer. AVI is known for preferring to engage constructively and behind closed doors, and so the decision to go public will not have been taken lightly and suggests that it is struggling to get its concerns recognised by management away from the public eye, despite its attempts to engage since initiating its position in 2024.
The core of AVI’s argument seems compelling. A series of poorly handled profit warnings – most recently a dramatic downgrade just weeks after reaffirming guidance – can only erode market confidence and AVI’s calls for new financial leadership, a dedicated capital allocation committee, and the divestment of the Moulded Glass division seem sensible in the circumstances. Hopefully, these moves will help to restore credibility and refocus Gerresheimer on its core operations in Containment Solutions and Delivery Systems.
With reported private equity interest in the business, there’s likely a window of opportunity to reshape the narrative. A streamlined, more focused company with improved financial communication could either support a rerating in the public markets or strengthen its hand in any strategic alternatives under consideration. The ball is now in Gerresheimer’s court. Investors will be watching closely to see whether the company responds with substantive action or continues to drag its feet. If it’s the latter, we expect to see AVI stepping up its pressure on the company.]
