Dupont goes on Membrane Technology Buying Spree!

I was just about to write a post speculating on how DuPont will integrate the recently acquired

BASF/Inge and Memcor Microfiltration/Ultrafiltration membrane products into its portfolio when it came to my attention that it was announced today they have just come to an agreement to also acquire Desalitech! Thoughts of Black Friday deals come to mind at this time of the year, but I won’t go there…

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.