Oberthur Fiduciaire acquires VHP Security Paper: nearly six centuries of cumulative history

Paul Mercier
4 min readMar 2, 2018

Last Summer, Oberthur Fiduciaire, one of the main banknote suppliers for central banks around the world, acquired VHP Security Paper from Arjowiggins. Oberthur Fiduciaire is 175 years old, while VHP Security Paper foundation goes back to 1644. With six centuries of cumulative history, both companies show how deep roots enable them to launch far into the future of security printing industry.

Last July, Arjowiggins released a statement announcing it has “entered into a binding agreement with Oberthur Fiduciaire concerning the sale of its subsidiary, VHP Security Paper BV, covering the VHP mill in Apeldoorn, the Netherlands, and the intellectual property rights related to the production of banknote paper, for a gross amount of Euro 22 million, (plus an earn-out).”

VHP specializes in banknote-paper production. Banknote paper, as the base product for currency, must obey a very strict set of characteristics, both to ensure durability and because paper is one of the drastically controlled design elements used to fight counterfeiting. As part of the Sequana paper-producing group, it was the only unit in charge of producing secure-printing paper.

However, the group had been undergoing serious financial difficulties for some times and failed to stabilize at the end of 2016, as it had planned. The Figaro reported in October of 2016 : “paper group Sequana continued to operate at a loss from July to September, and confirms its lowered objectives announced in July. The group published a 6-million euro loss in the third quarter, a slight improvement on the 14 million euros lost in the same quarter of the year before. Over the course of the first 9 month, Sequana increased its loss to 35 million euros, more than the 25 million euros it had lost by September in 2015.”

Cutbacks became inevitable but in the summer of 2017, the sale was finalized with Oberthur Fiduciaire, one of the main banknote-supplying companies in the world. The French company chose to acquire VHP mills both as a necessity and as an opportunity. The secure printer was keen, indeed, not to see the ancient know how disappear, when it relies on it so much.

Only a handful of companies in the world master the technology to produce banknote-quality paper. In addition, the French printer must, as all producers on this highly specific and tightly controlled market, secure the supply chain as much as possible. The large investments made into securing design elements when creating banknotes would be rendered useless if counterfeiters managed to break into the supply chain upstream or downstream.

By acquiring the upstream production unit, Oberthur Fiduciaire could bring under its control VHP’s security procedures, and integrate the paper unit into the tight reporting system its integrity relies on heavily. Indeed, Oberthur Fiduciaire was chosen as one of the printers to supply the Eurozone market with banknotes, specifically the E series. “Many printing skills, finishing skills and design skills are needed, besides growing R&D activities, all which develop new security features to adapt new techniques and new processes, to enhance the security and the durability of banknotes, says CEO Thomas Savare. These are some of the main concerns of the central banks we work with.”

As the joint venture which Oberthur set up with the Bulgarian National Bank (BNB) showed, a banknote printer must be even more aware of its environment than other companies. If reporting and quality control procedures differ from one unit to the other in the supply chain, glitches will appear in the production process, and quality or security could be compromised. “In conducting international tenders for production of banknotes, states the BNB, central banks have a requirement to explicitly name the locations of banknote production, and the printing works fulfilling the orders should meet the standards of access to information, standards for security and a quality control standard.”

We have to master the printing techniques themselves, but we also have to master the job of integrating different technologies, different substrates and different security features”, Savare admits. Notably upon the acquisition of VHP Security Paper, he declared: “Part of the security of our business comes from the supply chain, which is unique to the industry. Banknote paper is very specific one, only used for banknotes, and manufactured by extremely niche suppliers who will only sell to recognized banknote printers (state printers or private printers).

In such circumstances, supply management must obviously be done with surgical care, lest quality control levels be overstretched. But now that VHP paper mill is under direct control, it allows Oberthur Fiduciaire to enhance general security and performance to an unprecedented extent. “It was the right choice and the perfect match for both Oberthur and VHP, Savare concludes. This new acquisition will furthermore consolidate Oberthur Fiduciaire’s position as one of the largest and fastest growing banknote printers in the world.”