Covestro has signed an agreement with H.I.G. Capital (“H.I.G.”) for the sale of Covestro’s European Systems Houses business. H.I.G. focuses on investments in small and mid-sized companies. The sales proceeds amount to a high-double-digit euro million sum. The decision to sell the systems houses was taken as part of Covestro’s ongoing portfolio optimization process that includes the sale of Covestro’s North American spray polyurethane foam systems house in 2017.
“Our focus is future growth and value creation. That’s why evaluating and optimizing our portfolio is part of our daily business”, said CFO Dr Thomas Toepfer. “Providing tailor-made solutions, systems houses serve relevant market needs. However, in an advanced polyurethanes market like Europe we focus on a more centralized approach to efficiently address the needs of our customers.”
With its new owner H.I.G., the European Systems Houses now have the perspective to position themselves as an independent, focused player for mid-sized customers. In Asia with its developing polyurethane markets, Covestro will continue to serve its customers through its established systems houses network.
The systems houses are part of the company’s Polyurethanes segment and are offering tailor-made polyurethanes systems for customers. The European Systems Houses business comprises facilities in the Netherlands, Denmark, Spain, Germany and further businesses in Italy. Approximately 250 employees are generating annual sales of some EUR 230 million. Operations will continue at the current facilities while Covestro will continue to have strong ties with the systems houses as a key polyurethanes supplier.
With view on scale and capabilities as well as the solid asset base, the European Systems Houses perfectly fits into H.I.G.’s buy-and-build approach. H.I.G. aims to further develop their pan-European presence and to build a strong and independent European group of polyurethane systems houses with a clear focus on mid-sized customers. The company intends to continue working with the current experienced management team of the systems houses to further improve the business. The closing of the transaction is expected for the second half of 2019 after the required antitrust clearance.