The first acquisition
announced in late September was that of the Inge UF membrane product line from BASF which
makes sense to me as it will complement Dupont’s range of membrane products
where this membrane is a very durable inside-out PES membrane with some
benefits over DuPont’s existing IntegraFlux outside-in PVDF membrane in challenging
applications, plus established customers in Europe. It also does not change the
relationships with existing OEM customers who would potentially buy from both
membrane module suppliers.
The shortly after
announced acquisition of Memcor from Evoqua is a little more complicated to
work out. In my opinion, I don’t see how the Memcor MF module complements DuPont’s
existing membrane portfolio since it is outside-in PVDF and from what I can see
is losing a lot of market share to new higher surface area UF modules,
including DuPont’s - unless DuPont wanted to acquire Memcor’s existing global customer
base and add a submerged module to the portfolio, although for non-MBR
applications, I rarely see submerged MF/UF systems being installed these days. DuPont
wanting to add a MBR product to the portfolio makes the most sense and that
seems to be the consensus amongst others speculating from the outside. I don’t know
what percentage of Memcor’s sales are from MBRs, but it seems like DuPont is acquiring
a lot of other Memcor products just to get an MBR membrane.
I was asking
some of my DuPont contacts at recent conferences about the acquisitions but
understandably they can’t disclose any details until the deals are finalized at
the end of the year, plus it is my understanding all the details of how the
businesses will combine are still being worked out. I did also talk to some
Memcor/Evoqua employees and they said the whole engineering group will be coming
over to DuPont. That raises a big question to me. Is DuPont thinking of not just
being a membrane module supplier, but also expanding into the membrane system
market and becoming an OEM? Now that would open up a whole can of worms!
As an OEM
you would now have DuPont competing against their membrane module customers in
many instances. That is going to be very sticky to manage and will make other
OEMs very wary about disclosing project information when asking for quotes or
just going to other membrane module suppliers. If DuPont is just looking at
building MBR systems, there would be less conflict with its customers, since
DuPont is currently not in the MBR market, although some of its customers for
UF modules do also build MBRs so there would be some competition with these OEMs.
Does acquisition of Desalitech confirm DuPont is becoming an OEM?
Now how do
we interpret the recent announcement of the pending acquisition of Desalitech?
Desalitech has a proprietary high recovery Reverse Osmosis process and I
believe a lot of the time uses Dupont’s FilmTec membranes in this process,
although it has not been exclusive. Desalitech uses a number of fab-shops
around the US to build its systems, has its own salesforce and is essentially an OEM. So, what the heck is behind this move! I have spoken to
folks at Desalitech and some of their reps in the past and they have said they
are not competing against conventional RO OEMs and are only looking at applications
that need a recovery higher than what conventional RO can achieve and want to
work with conventional RO OEMs to build their systems – but that is a whole lot
of baloney. I hope DuPont hasn’t bought into that and think they can become an
OEM with the Desalitech system and not run into conflict with their traditional
RO membrane customers, who incidentally would make up the largest percent of sales
for all of their membrane products. That would be suicide for them. If DuPont licenses the technology to OEMs and stops manufacturing themselves that would make a lot more sense.
I just heard
the news about the Desalitech acquisition and may be jumping to conclusions,
but it is fun to speculate. Unfortunately, there are no conferences left this
year to hear what the industry may be saying about this. But the Memcor and
Desalitech acquisitions do suggest DuPont may be looking at some sort of
involvement in the membrane process equipment supply market and that will
result in some interesting discussions with their existing OEM customers. I am
sure all will be revealed regarding DuPont’s strategy in the membrane market in
early 2020. Should make for a very interesting AMTA/AWWA Membrane Technology Conference in Phoenix in March!
The comments and opinions in this post are my own and not those of my employer.
