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Mergers & Acquisitions

ICIG buys again in Germany

Investment firm is buying its third chemical business this year despite tricky market conditions

by Alex Scott
June 15, 2023 | A version of this story appeared in Volume 101, Issue 20


A chemical complex in Speyer, Germany.
Credit: HCS Group
HCS Group has seven plants, including this one in Speyer, Germany.

The European chemical industry’s financial struggles have not deterred International Chemical Investors Group (ICIG) from continuing to make acquisitions. The investment firm just announced its third German acquisition of the year by agreeing to purchase HCS Group, a producer of cyclopentane and other hydrocarbon specialties, from the private equity firm H.I.G. Capital for an undisclosed sum.

HCS’s products include oils, used in electrical transformers, as well as fuels and lubricants for motor racing. The German firm has about 500 employees and generated sales of around $490 million in 2021. HCS says it manufactured 500,000 metric tons of products in 2021 across seven sites in Europe and the US.

The European chemical industry is experiencing tough market conditions, and this is making acquisitions relatively cheap, according to analysts. “Valuations in the European chemicals sector are not high by historical standards,” says Sebastian Bray, a chemical stock analyst at Berenberg Bank.

“Receding energy-cost headwinds are now being replaced by slow China trend growth and flagging US and EU volumes as concerns in investors’ minds,” Bray says. “The commensurately low multiples may be attracting value-focused private equity investors with long-term time horizons.”

ICIG has already agreed to acquire two other German chemical businesses this year. In May, ICIG’s fine chemical subsidiary WeylChem agreed to buy the German custom synthesis firm Organica Feinchemie. It has annual sales of more than $20 million and about 150 employees.

In April, ICIG agreed to acquire facilities in Wesseling and Lülsdorf, Germany, from Evonik Industries. Together, the sites generated sales of about $280 million last year. They are part of Evonik’s Performance Materials division, which has been for sale since May 2022. Among other products, Evonik makes cyanuric chloride in Wesseling and potassium derivatives in Lülsdorf.

Last November, ICIG agreed to buy the French sodium metal producer Métaux Spéciaux from Nippon Soda. In all, ICIG says it has acquired more than 25 chemical businesses in the US and Europe since its founding in 2004. It has annual sales of close to $4 billion.



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