Become a Creator today!Start creating today - Share your story with the world!
Start for free
00:00:00
00:00:01
179. Bull, Bear & Beyond – In the chair with Mutares’ Johannes Laumann on US expansion, a record deal and growth momentum
8 Plays14 days ago
In this interview, Johannes Laumann, CIO of Mutares, discusses with Edison’s Neil Shah Mutares’ record-breaking $400m acquisition of the regional engineering thermoplastics business in the Americas and Europe of SABIC, its ambitious US expansion strategy and how Mutares is positioning itself for the next phase of global growth. From navigating carve-outs to capital allocation and future exits, Johannes shares real insights into what is driving the company’s success across sectors and continents.
**************************************************************************************
About ‘Bull, Bear & Beyond’
Bull, Bear & Beyond': features candid conversations with senior executives and from our own team of experts from across industries, exploring strategy, innovation, and the opportunities shaping their markets and 60-second pieces are a compressed summary of content designed to convey our message in a single, easily shareable hit.
About Edison:
Edison is a content-led IR business. We believe quality investment content should inform all investors, not just brokers. Our mission: engage and build bigger, better-informed investor audiences for our clients.
Edison covers 50+ investment trusts, read about them here: https://www.edisongroup.com/equities/investment-companies/
Recommended
Transcript
Reflecting on the Last Conversation with Johannes
00:00:07
Speaker
Welcome to this in the chair interview with the CIO of Mutares. I'm Neil Shah, market strategist at Edison. Johannes, when we spoke, it was probably about six months ago in August, you described the environment as beautiful for Mutares. Six months on, how's that played out? Where are you seeing the richest deal flow right now?
Mutares' Largest Acquisition: A Game Changer in Chemicals
00:00:29
Speaker
Well, thanks a lot for for hosting me today, first of all. ah Lovely. um Well, I think it played out very well. So um um when we met last time, um indeed, and life was good, life was beautiful. It was summer as well.
00:00:45
Speaker
But um and we we made we made a couple of deals, in fact, and the the environment was very, very helpful. very the the The pipeline was super full and super rich.
00:00:57
Speaker
And we have we have conducted a large deal in the Nordics and ah recently there to highlight maybe one of them. yeah And then a couple of days back, and we have signed the transaction with Sabic on the chemical side, um which was, from a turnover perspective, the largest transaction Motoris has ever conducted.
00:01:21
Speaker
So we acquired their ETB business for um um in the US predominantly um with a revenue of above $2
Investment Opportunities: From Auto to Chemicals & Materials
00:01:31
Speaker
billion a year.
00:01:31
Speaker
but Well, that that's significant news. I mean, this is the the biggest acquisition you've done to date. um yeah And ah two two or three interesting elements to it. The sector was in, um the size, and in particular, I'd love you to articulate what made this carve out particularly attractive. And also the country exposure, I think, was interesting. So maybe let me talk a little bit more about that.
00:01:54
Speaker
Yeah, sure. So and the turnaround action as such is important for us from a size perspective, as you said, from a geographical point of view, but also from um from a sector.
00:02:05
Speaker
So what I believe is, you know, we we we invest in turnaround situation. We invest in, and we buy companies in sectors which are in a kind of a transformation where things happen.
00:02:18
Speaker
10 years ago, it was the auto industry with the EV. Then it was a little bit of retail when the e-commerce started to come in. And now I think chemical and and materials in general, it started a little bit off with steel a couple of years back and and chemical came now, um which is a sector which is in in motion, so say, right? And um so they there there are...
00:02:42
Speaker
really a lot of assets, believe me, at the moment on the market, and European chemical assets.
Expanding Mutares' Presence in the US
00:02:47
Speaker
okay But to my view, um is um we we have looked at them, but the one which was really attractive to me was the one we acquired at the end of the day because there was the American exposure. so After you know we we are done, we have you know above 70, 75, 80% American exposure America's exposure, which includes Mexico and Brazil a little bit, but it was predominantly in the US.
00:03:13
Speaker
And then we have ah we have two plants here in Europe. But this exposure is interesting for us um on a geographical. We want to grow further in the US. This is our gross market for the next years and together with with Asia.
00:03:26
Speaker
And then ah secondly, we want to grow in this material segment. We want to grow in a material segment because that's in motion at the moment. and then And we want to grow big, right? So it's roughly $2.4 billion in time.
00:03:42
Speaker
um This should be something which is not a one-time. So we are we are looking on sizable assets. And um the deal in Norway as well was was a 450 million business.
00:03:53
Speaker
So um this is this is the this is the way forward. And the Sabik deal is super attractive. I love it. i mean, I worked with a team day and night for weeks. right There was no Christmas. There was no aid New Year. they'd Chemical deal in America.
00:04:11
Speaker
Let's, ah I want to be build a little bit of context about the U.S. So I'm aware that you've had a Chicago presence for some time. um But clearly there's a signaling there that, you know, the America is going to become a bigger part of the entire story.
US vs Europe: A Comparative Analysis of Market Dynamics
00:04:26
Speaker
So starting, walk us through what your expansion plans are for the U.S. I mean, you know, I'm ah i'm a big...
00:04:39
Speaker
I'm a big fan of the US because the US is really what I believe is if you want something really bad, there is always a way to get it. And this is the for me, the US.
00:04:50
Speaker
And um well, despite the fact that I have family there and living down in Texas and I love to hang around with them. But the US s for our business is also something which is understandable, right? The market.
00:05:03
Speaker
The people, they understand restructuring. They understand if situations are bad, you need to do something in order to bring it back. And last but not least, m the US is cash-driven and we are cash-driven as well.
00:05:16
Speaker
okay and though you you don't You don't joke around with funny money on and and book gains and and and and and and here and there. it's at the end, it's cash. And then this is why I believe that market is super interesting for us.
00:05:30
Speaker
And this was why I believe the industries which are in the US, like if it's the steel, if it's the auto, if it's the chemical, um there is a lot more for us for us in. and And obviously on top, and we want to have the angle in the US and that American corporates who divest somewhere abroad, that we are close to them.
00:05:52
Speaker
An expansion plan in the US is clearly and we want to we are hiring a lot of people also on the operations side at a moment in the ah in the US. We will have our our office in Chicago and um there is a very concrete plan to open a second office. um Luckily, unfortunately, the country is so big, you And I like Chicago, but I can tell you it's rough in the winter times. see any something po now Yeah, you've got the wind coming off the lake. um is Absolutely. what's the So look, i mean i got I want to do a compare and contrast. So as you're looking at the U.S., what's the U.S. opportunity set look like compared to Europe? Is it...
00:06:31
Speaker
similar, bigger, different. um And also, yeah I think you hinted at it. What's the seller motivation, you know, for particularly in carve-outs? Is it different to Europe? Is it that the same playbook? What should we be aware of?
00:06:48
Speaker
It's different. and um And first of all, let's let's take let's take the Zarbik deal we have done with the US explosion. I think there are industries and segments who
00:07:05
Speaker
work in the US while they're not working in Europe anymore. Okay. So the the a typical commodity chemical product you don't produce in Europe.
00:07:17
Speaker
Costs are too high, the Chinese are much better, the plants are too old, capex is too big, so don't do it. and This is also... am So if you produce special chemicals, yes. so But this type of business I would never acquire in Europe because there's no future, in my view, for commodity products.
00:07:37
Speaker
In the US they work. And um so there there you have segments industries which which are still there, right? In the US, the whole, let's take auto, the whole EV story in the US has not arrived and it will be difficult to arrive, right?
00:07:53
Speaker
um As I said, my family lives in Texas. I mean, you don't go anywhere in Texas with an EV car if it makes only 250 miles.
00:08:04
Speaker
So, and that's why, you know, and you have industries in the US s which work, which are already dead in Europe. yeah ah Secondly, the deal structure is different. the The deal structure is, while in Europe, you basically...
00:08:19
Speaker
the the price of a transaction is basically dictated by the P&L. In the US, the price is dictated by the balance sheet. Okay. and So you have more leverage there. You have more ah you know need of you know investing from the very beginning. um But you also have much easier to find that instrument in order to find it. So the deal structure in the US is different than in Europe.
00:08:45
Speaker
So you in the US, you pay the balance sheet. In Europe, you pay the P&L. And then, um and then ah ah last but not least, I think the
00:08:57
Speaker
the The market in the US, as I said before, and the motivation for the sellers for carve-outs, they are more or less the same everywhere in the world, right? Why do you carve out something and why do you sell something to us?
00:09:10
Speaker
First of all, you have an issue and you don't want to do it yourself, right? Secondly, you want to do it as cheap as possible, right? And a lot of times, you know, we can do a restructuring or a shutdown or closure whatever, cheaper than you can do it.
00:09:25
Speaker
Or that a corporate can do it. And last but not least is is also avoiding press. Right. And avoiding press in particular. mean. i mean
00:09:39
Speaker
Practically, it's not so difficult, let's say, for example, to lay off people in the US. However, for example, as a foreign corporate, you don't want to lay off people in the US s for the bad press, e etc etc. So it's right it's easier. You give it to us, you give us money, or you give it to for free, and we do the job.
00:09:59
Speaker
So the motivation is is is the same in the US. The deals are completely different, and the segments could be different
Exit Strategies and Attractive Segments for Mutares
00:10:06
Speaker
Okay. And I think, you I mean, you talked about the fact that you're building it out, you're resourcing, getting an operational team in place as potentially a second office.
00:10:16
Speaker
Organizationally, how do you think about it? Is this a standalone profit center? How does it work within Matariz? No, no, no. I mean, we we have one P&L in the holding, which is the listed holding. and um um But my expectation is clearly that in the you know in five years from now that and the U.S. is a country contributor to the profitability, which is more or less in the range of Europe.
00:10:45
Speaker
Okay. um you Last time you talked, you described, I think, 2025 as a heavy exit year. um And there were a number of sort of exits. Maybe you can give a little bit of color around that. And, you know, without necessarily giving specific guidance, what's the current exit environment like for 2026?
00:11:06
Speaker
um Well, we have we have made a lot of exits in 2025. So the last or January 2026 when we announced them. So we exited the CloudSip in the building materials segment. and We exited the Conexus in the telco segment. and We exited Fuentes and in the in the logistics segment. We exited Buderos in the steel segment. so This was just the exits of quarter four. Okay. and So also a lot of exits came along the line. um i think we we we we hold our promise.
00:11:42
Speaker
And um and um i'm I'm quite happy with the development of the same. Exit pipeline this year also seems to be very strong. okay Some of the exits have flipped into this year.
00:11:54
Speaker
um We are with some of them, we are further down the line and with others, we have just started. However, the exit environment in specific segments, for example, in the energy segment, very attractive at the moment. Very, very attractive, right? yeah and Exits in the infrastructure environment, very attractive at the moment. So um this is this this is where we look. Obviously, if you want to exit the retail business, it will be tough to find a buyer.
00:12:21
Speaker
Yeah. Okay. And and how does the how does the process work? so what is So is there a playbook in terms of moving from optimization to harvesting?
Balancing Exit Proceeds: Debt, Investments, and Dividends
00:12:31
Speaker
um well How do you think about it?
00:12:35
Speaker
I mean, we we we kind of look from the back, right? So we we we want to make the first, let's say, a couple of weeks and months, we stabilize the company, we make it standalone, and we have ah we we we put our our game plan and in in place.
00:12:49
Speaker
And then it's really, you know, bring the company, make the company nice, clean, um and separate in order to, you know, sell it. So we question a lot of our decisions. We question what is the impact in an exit?
00:13:04
Speaker
And we know who we want to sell to. yeah So and this is this is kind of the playbook. We have a very structured way of doing it the first 100 days. yeah And then it it depends what is the what the playbook says after the first 100 days. it's led little little bit like in football. right The first drive is always scripted.
00:13:24
Speaker
And then it comes down to the decision of the offensive coach or the quarterback, what he does. yeah and So we have the same... Okay. Don't call me a quarterback. but Not least for for your Texas relatives. um You previously said, I think you you said this, that that you know if you can't generate ah competition in an exit process, you stop it. you I just want to check, is that still the case? And you talked about some of the sectors that are attractive and less attractive. So perhaps don't need to go into that. But is it ah is that how you typically run it, which is you want to make sure there's a competitive process?
00:14:04
Speaker
Well, yes, and I think this this is ah this drives the process competitiveness, right? If you have only one, you know, if you only have one choice, it's maybe not the best choice, right? and we we We also, we do I mean, we stimulate and we we we want, we have a clear target um ah to have competition in a process. and This is in an exit process for me, the number one with what my guys, but also our investment banks or or our advisors have to.
00:14:33
Speaker
yeah have to set up, right? Because, um, you You can have a discussion about market multiples, e etc. e etc that is That is all fine. And you know I'll ask the question of how do you see the multiple development.
00:14:46
Speaker
ah At the end of the day, the multiple is defined by competition. stop but If you have no competition, the multiple is tenly well is's normally low. yeah ah If you have competition, multiple is high. you so As easy as it is. so yes In an exit process, I want to have competition.
00:15:04
Speaker
If not, it's not an exit. Okay. um Let's move on to capital allocation. There's a bond refinancing for 2027. How you balancing exit proceeds and utilizing them between debt reduction, ah new investments, and paying out dividends? What's what's the thought process?
00:15:26
Speaker
um let Let me structure the different styles a bit. So um on the dividend side, let's start with that one. We have said if there is a base dividend of two euros, and which we want to pay out.
00:15:39
Speaker
yeah And we have sticked to this promise. And ah given the fact that we have not ad hoc anything else, m this is this is the sort process of dividend.
00:15:50
Speaker
Then on the on the bond side, and we want to reduce the bond. um So um this is this is a clear signal. ah So part of the 2027 bond shall be repaid.
00:16:04
Speaker
And then part of the 27 bond shall be in one or the other form refinanced, rolled over, newly placed. We are not there yet.
00:16:16
Speaker
um ah but then on the other side, we also have some challenges. As I said before, um growing in the US market also means you're going to pay the balance sheet, not P&L.
00:16:27
Speaker
yeah So you need to allocate some capital in a transaction because obviously an acquisition financing of 100% is difficult. So and also part of the money ah really, really goes into the growth in America, but also in Asia. right We have talked a lot about the US.
00:16:44
Speaker
yeah But we have also a new office in Japan where we see the first you know pipeline now really building up. and There is a good pipeline in China and there is a good good pipeline in in India slash Middle East. So and it's the the growth of Muttaris in the next five years comes outside Europe.
00:17:01
Speaker
Okay. For sure. Okay. And let me just clarify on the dividend. I mean, you've given, i think, the holding company income guidance of, you know, 130 to 160 million euros net income for this year.
00:17:13
Speaker
What's the relationship between that and the dividend? How should and ah investors sort of think about that?
00:17:21
Speaker
Well, it's the earnings per share, right? At the end of the day. um what What we want to do is, and and and and we look very carefully on that. So we we say we have a base dividend of two euros and then depending on the success of the year, but also depending on the future plan and what's on, right? yeah um We it up or not, right?
00:17:42
Speaker
you know we can top it up or not right Given the fact that I think, and well, we haven't announced anything, but the him if if you look at what's coming up, right, we want to grow in the US, which is a capital allocation topic.
00:17:58
Speaker
and we We want to repay part of the bond, which saves on the long term, obviously, interest. um and And then at the same time, I think we we we at least we we dividend out the basic dividend. So and these challenges coming ahead.
00:18:12
Speaker
um m Capital allocation to me goes. and Well, my priority is growth. Okay. Okay. um Let me just touch quickly on risks and risk, because I think you've given a fair amount of sort of color in terms of the forward-looking side
Managing Risks and Non-Performing Companies
00:18:32
Speaker
of things. I just want to talk a little bit about risk and and risk management in particular. So, again, last time I think we talked, you said that, you know, one in 10 deals doesn't evolve as expected.
00:18:43
Speaker
i think you've got a portfolio of about 34 companies. Yeah. How do you manage concentration risk? um And how quickly do you intervene, um head office or yourself intervene when turnaround stalks?
00:19:00
Speaker
Yeah, I mean, you know, we we acquire companies in difficult situations. So and some of them ah do not work. So if if you take my ratio from last time, then we have roughly three to four headaches in the portfolio. I can confirm we have three to four.
00:19:18
Speaker
um um Well, in all fairness, a lot of them are on the automotive side. But that is how it works.
00:19:29
Speaker
I mean, important, I think, to understand is how we acquire businesses, right? So we have the listed company, Mutaris. where you can buy shares on on the stock exchange. And um below that, we have our SPV structure.
00:19:41
Speaker
yeah And below the SPV, obviously, there is the Opco. yeah And so everything is ring-fenced. So if one company doesn't work, we have to decide if we want to support them or not.
00:19:53
Speaker
And I think this is important to understand and that's from a legal perspective. Obviously, from an operational perspective, we have to look at and ah you know more details. So we have our our guys on the ground. We have 160 people who are in and out of the 34 companies every day.
00:20:09
Speaker
And we have to analyze what we can do. right And if there's a future and what we can change. um a But believe me, ah good news comes fast, bad news comes faster. So and that it it it's on my desk. And then, you know, I have to make at the end of the day the decision what to do. Okay, let's wrap
Vision for Mutares' Growth and Expansion in America
00:20:32
Speaker
up. Okay. um if i was If we were sitting here in 12 months' time, what would success look like for the TARIs?
00:20:44
Speaker
First of all, you would see less of me because I have the same challenges every year in January. I want to lose weight. But let's see if that works out in 26. It hasn't worked out the last 10 years. But 26 is my year.
00:20:57
Speaker
yeah and No, I'm joking. I think what what what we would have is i I would like to see that we have further growth in America. yeah I would like to see that we have further growth in segments like energy, like construction, but also like chemical.
00:21:14
Speaker
Yeah. um and And I would like to see one additional office ah opened. Yeah. and um And I would like to see that we have exited and the companies we are planning to exit, where um ah two of them, I am very optimistic, will be a blast and will be massive.
00:21:40
Speaker
ah Always a pleasure, Johannes. I find these some of the most stimulating and entertaining conversations I had. Johannes, thank you very, very much for your time. For those who want to find out more about Mataris, there is very good information on their own HiR site. You can also visit www.edisongroup.com and have a look at the landing page for Mataris. Thanks again, Johannes.
00:22:03
Speaker
Thank you so much. Appreciate it.