Semperit closes on $216.4 million acquisition of Rico Group

May 18, 2023

VIENNA, Austria—Semperit A.G. Holding has seen the growth of the silicone market in Western Europe and the U.S., and the company is making a major investment in the material with the acquisition of fellow Austrian firm Rico Group GmbH.

Semperit closed on the $216.4 million purchase July 31.

"The acquisition of Rico is another important step in implementing our growth strategy with a focus on global leadership, innovation and technology," said Semperit CEO Karl Haider. "Semperit thus achieves technology leadership in liquid silicone and high-end mold production and strengthens its industrial core business."

Haider added that the acquisition fits perfectly with Semperit's new, streamlined industrial rubber goods-only philosophy.

"This goes along with servicing high-growth sectors such as health care and industrial household applications," Haider said. "The acquisition is value-enhancing and also increases our presence in the North American market."

Rico serves industrial customers in the health care and life science, household and sanitation, electrification and mobility sectors.

The company was founded 29 years ago in Thalheim, Austria, and offers highly complex, precise custom solutions in high volumes. The group consists of five companies, with three in Austria and one each in the U.S. and Switzerland.

With about 500 employees and annual sales of about $100 million, Rico brings to Semperit "global technology leadership" in LSR. Semperit plans to leverage Rico for its core industrial business, especially as it relates to increasing its share of the North American market.

Rico's plant expansion currently under construction in Thalheim (near Wels), Upper Austria, also is part of the purchase. Rico Group broke ground in June 2022 on the first phase of the project, and expects the new building to be occupied sometime this year.

Rico, which offers a full spectrum of services from prototyping to mold-making and high-volume production runs, also plans expansions at the U.S. and Swiss sites, Semperit said.

According to Semperit, the market for silicone products in Western Europe and the U.S. is expected to grow "significantly" by around 7 percent annually through 2027.

Currently, the silicone market in those regions sits at about $8 billion.

Globally, the silicone market was estimated at about $18.5 billion in 2022, with 2027 projections at about $27 billion, according to San Francisco-based Grand View Research.

It was always going to be a trade-off for Semperit Group, operating under the notion that something must be lost for something greater to be gained.

As the company's Sempermed segment exits stage left, purchased by Harps Global Pte. Ltd. in December for $122.1 million, Rico Group enters stage right.

While the Rico acquisition has been finalized, the sale of Sempermed, which had produced nitrile and surgical gloves as a standalone business unit, has yet to be finalized.

With the pending sale, Semperit is able to focus exclusively on being an industrial rubber products maker.

"At the beginning of 2020, as part of its strategic realignment, Semperit decided to focus on the identifiable potential in the industrial sector in the future and to complete its transformation to become an industrial rubber specialist," the company stated in its 2022 year-end financial report. "The restructuring steps already taken in previous years have significantly strengthened resilience within the industrial sector and laid solid foundations for future growth."

Semperit recorded just more than $1 billion in net sales in 2022, a 10.5-percent decline against 2021's $1.12 billion in net sales.

EBITDA in 2022 registered at $86.1 million, an 8.6-percent margin. Semperit recorded EBITDA of $344.1 million in 2021, a margin of 30.6 percent.

The higher net sales and margins in 2021 are a direct result of higher sales within the Sempermed business unit, according to Semperit officials.

The industrial unit of Semperit, which outpaced its 2021 net sales, includes Semperflex, Sempertrans, Semperform and Semperseal.

For the 2023 financial year, Semperit expects an economic slowdown associated with lower revenue and earnings levels from the divestment, but also a recovery following the pandemic.

The publicly listed Semperit develops and produces polymer products for the industrial and medical sectors, selling them in more than 100 countries around the world.

Components include hydraulic and industrial hoses, conveyor belts, escalator handrails, construction profiles, cable car rings, products for railway superstructures, and examination and surgical gloves.

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