Is Europe’s CNG market entering a consolidation phase as Hexagon Composites ramps up M&A?

Hexagon Composites ASA (OSE: HEX.OL) has taken another step in reshaping Europe’s alternative fuels market by completing its EUR 11.7 million acquisition of SES Composites from Worthington Enterprises (NYSE: WOR). The Norwegian composite cylinder manufacturer, already a dominant name in high-pressure gas storage systems, now has full control over SES Composites’ manufacturing operations in Słupsk, Poland, and valve assembly facility in Burscheid, Germany. With this move, Hexagon Composites is strengthening its supply chain for compressed natural gas (CNG) systems, which continue to see robust demand among European commercial transport operators looking for transitional low-emission fuel options.

The deal follows a 49% minority investment in Worthington’s Sustainable Energy Solutions (SES) business in 2024, executed alongside Hexagon Composites’ divestment of its LPG-focused Hexagon Ragasco unit. This strategic shift reflects a broader repositioning by the Norwegian alternative fuel systems specialist to focus entirely on clean transport solutions. SES Composites, which generated EUR 28 million in pro-forma revenue in 2024 and is projected to deliver EUR 33 million in 2025 with an expected EBITDA of EUR 2 million, adds both scale and established OEM relationships to Hexagon’s portfolio.

What makes the Hexagon Composites–SES Composites deal a signal for wider CNG market consolidation in Europe?

The SES Composites acquisition is being interpreted by analysts as an early indicator that Europe’s CNG market could be entering a consolidation phase. High-pressure cylinder manufacturing, a capital-intensive and scale-dependent segment, is facing growing cost pressures as demand for lightweight, high-capacity storage solutions rises. Integrating SES Composites’ Polish and German facilities will allow Hexagon Composites to optimise production runs, reduce component sourcing costs, and offer OEMs faster turnaround times—advantages that smaller competitors may struggle to match.

Recent cross-border partnerships in the sector, such as Italian cylinder manufacturer Faber Industrie’s alignment with European transit bus fleets and Czech-based producers seeking technology-sharing agreements, underscore the push for strategic alliances. Institutional investors following these trends suggest that achieving economies of scale will be crucial for suppliers as OEMs increasingly insist on competitive pricing and secure long-term supply contracts.

Worthington Enterprises’ exit from SES Composites further underlines this point. By focusing instead on building products and HVAC markets, Worthington is leaving the high-pressure alternative fuels business to specialised manufacturers capable of managing the operational complexity and capital intensity of CNG systems. Industry observers note that similar divestments by diversified conglomerates are likely as the CNG market matures into a more specialised, vertically integrated supply chain.

How does this trend affect Europe’s commercial transportation sector and what lies ahead?

For municipal bus operators and logistics fleets, CNG continues to offer a cost-effective compliance pathway compared to full electrification, particularly in regions where charging infrastructure or hydrogen refuelling networks remain underdeveloped. Analysts estimate that Europe’s CNG-powered bus fleet will grow at mid-single-digit rates through 2027, supported by government-backed emission reduction schemes and subsidies for renewable natural gas (RNG) adoption.

Consolidation among CNG system manufacturers could accelerate this trend by stabilising component prices and improving delivery reliability, making CNG adoption more attractive to fleet operators with tight procurement budgets. SES Composites’ existing backlog of orders from European transit bus OEMs aligns with this outlook, suggesting that Hexagon Composites’ expanded capacity will quickly translate into market share gains.

From a strategic perspective, Hexagon Composites’ increased 33.8% ownership in Hexagon Purus after the deal hints at a longer-term integrated strategy. While CNG remains central to its current European growth plan, cross-portfolio collaboration with Hexagon Purus could allow for hybrid fuel system offerings, serving operators transitioning from CNG to hydrogen or battery-electric vehicles over the next decade.

Will more M&A deals follow in the European CNG market?

Industry watchers believe this may be just the beginning of a larger consolidation wave in Europe’s alternative fuels segment. Suppliers specialising in composite cylinders and storage systems may seek mergers or acquisitions to remain competitive as OEMs scale up CNG orders and demand stricter quality standards. Given Hexagon Composites’ strong financial position and established OEM relationships, further targeted acquisitions or partnerships could follow, particularly in Eastern Europe, where demand for affordable low-emission transport solutions is accelerating.

For now, the SES Composites acquisition positions Hexagon Composites as a key player in shaping how Europe’s public and commercial transport operators balance immediate emission reduction targets with the long-term shift to electrification and hydrogen.