Germany’s Messer to Buy Out Investor CVC

02.06.2023 - Toward bringing global operations under sole family control for the first time since selling the bulk to Hoechst 1965, German industrial gases producer Messer is buying out investor CVC. To finance the plan, the company will sell a stake to Singapore sovereign wealth fund GIC.

German industrial gases producer Messer, currently the only privately owned business of its kind type globally, is restructuring its share capital in a move toward bringing its entire global operations under sole family control for the first time since selling three-quarters of its assets to the now defunct Hoechst group in 1965.

In a first step, the Bad Soden-based principal operating company Messer SE & Co KG will acquire all shares held by CVC Capital Partners Fund VII in the joint venture Messer Industries by the end of this year and integrate these assets into its portfolio.

In parallel, to help pay CVC for its shares and strengthen the company’s financial position, Messer will sell a minority stake (of around 20%, reports say) to GIC, the company that manages Singapore's sovereign wealth fund.

With the buyout of CVC, which is due to complete by the end of this year, supervisory board chairman Stefan Messer, family patriarch in the third generation, said the gases producer will create the foundation “to continue and our successful 125-year history globally together with GIC and thus differentiate ourselves from our listed competitors.”

GIC will remain a long-term minority shareholder, Messer said, noting that the “successful cooperation” with the US private equity group was “designed to be temporary from the outset.”

Bernd Eulitz, who succeeded Stefan Messer as CEO at the end of April, commented that as an integrated company the German player will grow into new dimensions, both organically and through targeted acquisitions, and as the world's largest privately held industrial gases specialist become the top challenger to the industry's “big three”: UK-based Linde, France’s Air Liquide and Air Products of the US.

Alexander Dibelius, who has responsibility for CVC's business in Germany, added that the four-year partnership, ”based on an ambitious joint business plan, a clear allocation of roles, mutual respect and trust, wrote a success story at Messer Industries and realized a significant increase in value for all parties involved."

The JV Messer Industries, which comprises the group’s companies in North and South America, along with others in western Europe, was formed at the beginning of March 2019, together with CVC as a vehicle to purchase assets that German rival Linde was obliged to shed to gain regulatory clearance for its merger with US gases giant Praxair.

The deal included substantially all of Linde's US bulk business and its operations in Brazil, Canada and Colombia, which together generated sales of around $1.7 billion in 2017.

Messer brought into the new JV its operations in Spain, Portugal, Switzerland, France, Benelux, Denmark and Germany, which employed 780 people and generated 2017 sales revenue of €334 million. The gases company had sold its own North American holdings to France's Air Liquide in 2004. 

In 2022 Messer Industries posted sales of €2.59 billion and EBITDA of €749 million. In total, the Messer group reported sales of €4.16 billion and EBITDA of €1.17 billion for that year. The German company now said it sees “good opportunities” to more than double its business volume by the end of the decade.

Both Messer and CVC said they profited from the partnership. But according to reports from the German financial sector, the private equity investor profited most. The €3 billion or more Messer is reportedly paying CVC for its shares is said to be worth nearly five times their 2018 value.

Author: Dede Williams, Freelance Journalist