The German group said it is making good progress with negotiations to sell its web arm, and while the name of the potential buyer remains under wraps, it is believed to be Goss.

Its digital division too seems likely to be sold, with Kodak being tipped to pick it up, but at the moment Heidelberg will only confirm it is being repositioned.

Postpress is to become a separate legal entity, but PrintWeek understands Heidelberg will retain stitching and folding interests and sell off its web finishing range.

In addition, a further 1,000 redundancies about 5% of the workforce will be made worldwide and the management board has been slimmed.

Chief executive Bernhard Schreier said the firm would focus on its core strength in sheetfed offset. Our target markets will be commercial printers as well as packaging and label printing, he said.

The move marks the end of the former chief Hartmut Mehdorns dream of creating a single-source supplier, which he attempted to achieve through a period of rapid expansion in the 1990s.

The industry doesnt need [a single-source supplier] and even when it did need it the products did not have parallel business principles, said Komori UK marketing manager Philip Dunn.

But one industry source said the problem lay in the implementation, not the strategy itself. They bought sick or failing businesses and didnt install fresh management. If they had got the pieces of the jigsaw together properly it would have been unstoppable, he said.

RWE [the German group which owns a 50% stake in Heidelberg] didnt get a buyer for it lock, stock and barrel so they are selling it bit by bit, he added.

Heidelbergs share price steadily crept up in the days following the announcement (on 27 November) indicating the news had gone down well with investors.

As PrintWeek closed it had reached a 52-week high of E33.04 and analysts at Merrill Lynch had upgraded the stock from neutral to buy while raising the 12-month target price to E37.

Story by Lauretta Roberts