Groupe Solmax has acquired its larger rival in the geomembrane market, GSE Environmental Inc.
Solmax announced the purchase on Dec. 20 but did not release terms of the deal.
Solmax, based in Varennes, Quebec, runs a manufacturing plant there as well as in Houston and Malaysia. GSE's geomembrane plants are in Houston, where it is headquartered, Kingstree, S.C.; Spearfish, S.D.; Germany, Thailand, China and Egypt. Geomembranes, typically made of blown polyethylene film, are used by a range of industries and environmental facilities.
"In a highly fragmented market of polyethylene geomembrane manufacturing, we will have the opportunity to lead and help reshape the industry, based on competitive drivers such as operational excellence and efficiency, superior quality products and deep R&D capabilities," said Solmax President Jean-Louis Vangeluwe in a news release.
Solmax started as a geomembrane distributor in 1981 and entered production in Varennes in 1997. In 2009 it opened its plant in Kuala Lumpur, Malaysia. It began expanding capacity in Varennes in 2013 and four years later acquired the Houston manufacturing assets from the former Brawler Inc. Solmax spent a few months upgrading the Houston operation and officially reopened it in June 2017.
In its early years, GSE grew rapidly by acquiring competitors. Lately it has been expanding its North American operations since it emerged from Chapter 11 bankruptcy protection in August 2014. The new owners out of bankruptcy became Greenwich, Conn.-based private equities Littlejohn & Co. and Strategic Value Partners LLC, which sold GSE to Solmax.
The acquisition gives Solmax a wider global manufacturing network that will allow the company to work more closely with customers and local, specialized installers. The new heft of Solmax should allow it to work more effectively with global companies that seek to do business with global manufacturers, Vangeluwe noted in the news release.
Geomembranes and related products such as geonets enjoyed rapid growth beginning in 2000. Growth began to stall in some key markets by 2012. Mining and then oil and gas projects slowed down, cutting demand for the products used to stabilize and contain soil and water. The slowdown hurt geomembrane producers. GSE, arguably the largest such producer globally, sought bankruptcy protection and then Littlejohn and SVP saved the company by acquiring it. Littlejohn held the majority of equity.
The industry was ripe for consolidation and Solmax looked for ways to make that happen to its benefit. Talks between Solmax and GSE began in November 2016, according to a video interview with Vangeluwe by Geosynthetica.net. Before a deal was consummated between the companies, Solmax bought the Houston assets when Brawler was financially stressed.
Vangeluwe indicated in the video interview that the deal with GSE is aimed at bringing innovation to the marketplace to shake the industry out of its cost-leadership competition.
"There comes a moment when you need to innovate either on process or product,"Vangeluwe stated in the video.
"We wanted to do it with another company that really brings a critical size so we can actually have an impact on the industry."
Solmax now owns a majority of GSE. Minority positions are held by two Quebec investment agencies, Caisse de Depót et Placement du Quebec and Fonds de Solidarité FTQ. The Caisse is a long-term institutional investor and Fonds de Solidarite is a capital investment fund "that channels the savings of Quebecers into investments."