Michelin expanding high-tech materials business with $764 million acquisition

CLERMONT-FERRAND, France — Michelin Group is looking "to become a global leader in high-tech engineered fabrics and films" with the pending purchase of Paris-based Flex Composite Group (FCG) for more than $764 million.

Michelin agreed recently to purchase FCG, which has six manufacturing subsidiaries throughout Northern Italy, from IDI, a French private equity firm.

Financing was completed with 100% available cash, Michelin said.

"Michelin's strong financial position will be maintained post-transaction," Yves Chapot, general manager and chief financial officer for Michelin, said during a June 19 investor presentation. "This is an important step to developing Michelin beyond mobility and positioning it as a key player in polymer composite solutions, in line with the Michelin in Motion 2030 strategy.

"We will leverage both companies' distinctive capabilities to unlock ... innovation synergies in a broad range of products and applications."

The acquisition, when finalized, is expected to boost overall revenue within Michelin High-Tech Materials (which represents 3% to 5% of Michelin's overall revenues) by about 20%, Chapot said.

FCG rep;orted about $220.5 million in annual revenue last year, according to Michelin, from sales of goods to customer in the marine, supercars and electric vehicles, sports and construction industries. Pre-tax (EBITDA) operating margin was in the 25% to 30% range.

Organic growth between 2015 and 2022 measured at about 11% per year for the firm.

"FCG has enjoyed very substantial growth in its business in the last years," Emmanuel Capriglione, general manager of FCG, said. "This success is due to recognized expertise in composite materials and films, a capacity for innovation and a strong desire to constantly improve the service provided to its customers.

"With Michelin, FCG will be able to increase its capacity for innovation, its actions to reduce its environmental footprint and to provide its customers with more sustainable materials."

FCG has about 400 employees.

FCG works in resin-impregnated fabrics (Angeloni and Selcom brands), flexible coated fabrics (Orca) and technical films and membranes (FaitPlast). Resin-impregnated fabrics comprise about half of FCG's sales, with coated fabrics at about 29% and films and membranes at about 21% (mostly in the technical apparel space), according to Michelin.

"FCG masters a wide range of polymer composite solutions, adjacent to those already developed by Michelin," Chapot said.

Growth drivers for the firm include electrification in the mobility sector, "dynamism of sports cars and supercars segments" and increasing demand for carbon composites in yacht, sailboat and the construction industries.

Besides the high-tech engineered fabrics and films that FCG brings to the table, Michelin High-Tech Materials includes sealing technologies, belting and engineered polymers.

The division generatews about 45%cent of its sales in the Americas, with 37% in the Asia-Pacific region and 18% percent in Europe/Middle East/Africa, according to Michelin.

Conversely, about 4% of FCG's sales are generated in the Americas, 9% in APAC and the lion's share, 87%, in EMEA.

While Michelin can access FCG's material know-how, FCG will be able to leverage Michelin's footprint to grow in North America, Chapot said, as well as Michelin's deep roots in defense, aeronautics and high-end automotive markets.

"This is part of our goal to enhance people, profit and planet performance, which is at the heart of our future success," Chapot said. "It is a leadership model that puts people, teams and empowerment at the center of our mindset and behaviors.

"And this will serve our mission to accelerate research and development related to the next generation of materials."

And this plays into the notion of sustainability, which is part and parcel with Michelin's stated planet priorities.

"Synergies in fabrics and films gives us a clear roadmap toward 100-percent sustainable materials by 2050," Chapot said. "And we will accomplish this with dedicated R&D programs."

Florent Menegaux, CEO of Michelin, welcomed FCG into the fold.

"This operation draws on the best of both companies, in particular on our shared expertise in polymer composite solutions," Menegaux said. "We are aiming to generate synergies and to push back the frontiers of deep-tech innovation in a wide range of new products and applications."