Michelin to acquire Flex Composite Group to fortify presence in polymer composite market

French tyre manufacturer Michelin has reached an agreement with Investissement et Développement Industriels (IDI) to acquire the entirety of Flex Composite Group (FCG) at an enterprise value of €700 million, in a move to significantly strengthen its high-tech materials segment.

Flex Composite Group, a European leader in engineered fabrics and films with applications in highly technical markets like marine, supercars and electric vehicles, sports, and construction, reported a revenue of €202 million in 2022.

With 400 employees, the France-based Flex Composite Group operates primarily in Europe, targeting high-end customers in rapidly expanding markets. The company, boasting an average organic growth of 11% over the 2015-2022 period and an EBITDA margin of 25-30%, offers a wide range of polymer composite solutions. These solutions nicely complement those already developed by Michelin.

Emmanuel Capriglione — Flex Composite Group General Manager said: “With Michelin, FCG will be able to increase its capacity for innovation, its actions to reduce its environmental footprint and provide its customers with more sustainable materials.”

Michelin to acquire Flex Composite Group in a €700m deal to boost high-tech materials segment. Photo courtesy of Fabien1309/Wikimedia Commons.

This acquisition is expected to enable Michelin and Flex Composite Group to create a frontrunner in the field of high-tech engineered fabrics and films. It aligns seamlessly with Michelin’s 2030 strategy, dubbed ‘Michelin in Motion.’

The move underscores Michelin’s strategic intent to expand its polymer composite activities in adjacent areas, capitalizing on unrivaled innovation, R&D capabilities, and leveraging Flex Composite Group’s advanced customer intimacy and industrial process expertise.

The transaction holds the promise of generating profound innovation synergies across a broad range of products and applications while further reducing the environmental footprint of Flex Composite Group. This acquisition will enhance Michelin’s High-Tech Materials revenue by approximately 20%, accelerating the growth profile of this business segment.

Florent Menegaux — Michelin CEO said: “This operation draws on the best of both companies, especially our shared expertise in polymer composite solutions. We aim to generate synergies and push the boundaries of deep-tech innovation in a wide range of new products and applications.”

Michelin will finance the transaction through cash at hand, ensuring that the company’s financial position remains robust post-transaction.

The transaction, subject to customary closing adjustments and merger control clearances in relevant jurisdictions, is expected to be completed by the end of Q3 2023.