More Membrane Market Consolidation!

Suez Purchase of Lanxess’s RO Product Line

We may be stuck in our homes or offices in these unusual times but that hasn’t stopped players in the membrane market from making some interesting acquisitions in the past few months. The biggest recent news is Suez’s purchase of the RO membrane portfolio from Lanxess. In 2019 we saw a membrane manufacturer (Dupont) buying an OEM (Memcor), and now we have an OEM getting into the membrane manufacturing business. I am wondering what Suez’s motives are here. 

One of the points in the July 16 press release from Suez says the acquisition will “expand its international RO membrane production capabilities and expertise to help meet growing global demand”. See here for full release. That implies to me that Suez will not only use the membranes for its own RO products, but also plans to sell these to other OEMs and end users – unless it will just be chasing the RO membrane replacement market, which is significant. I doubt other OEMs will be interested in buying membranes from a competitor where there are plenty of alternative RO membrane suppliers available.

Now if Suez is mainly targeting the membrane replacement market, that is a different story. Lanxess has had very competitive pricing and if that pricing is sustainable, and not just an attempt to get reference installations, Suez may be able to pick up a good chunk of business. Not being known as a membrane company and with the RO membrane market pretty much commoditized, I think it was hard for Lanxess to break into the market. Now with the backing and reputation of Suez, that should provide more opportunities to bid projects and then it will just depend on whether the pricing remains competitive. Suez will also provide instant references from the RO systems it sells and from replacements at existing systems.

So now that I have thrown this idea around a bit, I think I have worked it out – Suez plans to use the Lanxess membranes in its own RO systems (which is a no brainer) and will also be chasing the RO membrane replacement market, but will not necessarily be expecting to sell many membranes to other OEMs, which makes sense. This will certainly put a hole in sales for the major RO membrane manufacturer who has been private labelling RO elements for Suez up to now.

Metawater Purchase of Wigen Water Technologies

I also must mention the purchase by Metawater of Wigen Water Technologies in April. See press release. While I am an employee of Wigen, I think all would agree the acquisition will certainly provide Wigen with the resources to pursue larger projects and grow faster than would be possible as a small business. It is also a reasonably seamless purchase where there are no management changes, Wigen retains its name and operates as a subsidiary of Metawater. Aqua Aerobic Systems, which was purchased by Metawater in 2016 has virtually no product overlaps with Wigen. So, I would say this is one of the less controversial acquisitions in the past 12 months.

Who is next?

There are still some smaller membrane OEMs out there ripe for the picking for larger companies wanting to expand in the market and maybe there are some larger OEMs hurting in these tough economic times and looking to exit the market so let’s see what happens in the next 6 months!

The comments and opinions in this post are my own and not those of my employer.