OpenGate Capital will announce later today that it is forming Aluminium Solutions Group (ASG) through the merger of Extol – which it acquired in late September – and Aluminium France Extrusion (AFE), a portfolio company since June 2013.
Affiliate title PE Hub Europe caught up with OpenGate managing director Fabien Marcantetti and senior vice-presidents Xavier Lambert and Bruno Amaral to learn more about the plans.
Marcantetti said: “We won’t make M&A a particular focus of this acquisition, because we started with the merger of two companies – it’s already an M&A play. We’re not necessarily convinced we could drive more synergies if we added another piece on top of that.”
Extol is a specialty extruder and manufacturer of custom aluminum parts with facilities in Toledo, Spain – where the company is headquartered – and in Nantes, France. In late August, OpenGate entered exclusive negotiations with private equity firm MCH and Fernando Busto, founder and CEO of Extol, to purchase the company. The sale went through on September 30.
AFE is an aluminum extruder serving the construction, transportation and industrial sectors. It is headquartered and has facilities in Saint-Florentin in France and further facilities in Ham, France.
While Los Angeles-based OpenGate will focus primarily on organic growth for Extol, M&A is not fully off the table. “We never say no, of course,” Marcantetti said. “If our performance improvement and integration plan remain on track, we may be tempted to look abroad, primarily at DACH and Benelux.”
Enhancing the ESG profile of the business is also part of the growth plan. OpenGate will examine “multiple avenues,” including specific investments to facilitate recycled materials in the production process. Marcantetti did not go into more detail, but said the firm will “announce them in due course.”
To Amaral, leveraging industrial assets and the presence that both companies have on their original markets is key. “What we see here are two very strong industrial players, each of them with a unique set of technical capabilities, that together will have complementarity,” he said. That will allow them “to come to the market with a more complete product offering,” he added.
Adding an industrial asset into the portfolio was an obvious move for OpenGate. The sector is “our bread and butter,” said Marcantetti.
Extol came out on top after OpenGate considered multiple options in Western and Southern Europe and the DACH region. “We really believe in the long-term fundamentals of aluminum extrusion,” Marcantetti said.
Looking further into the future, OpenGate sees several exit options. A potential buyer could be “someone like us – very operationally hands on” that would add more complexity or integrate other companies, Marcantetti said. “There is the trade buyer option as well. Some of the more upstream guys could potentially integrate downstream, and some of the downstream guys could backwards integrate.”
The deal will create France’s second-largest and Europe’s sixth-largest aluminium extruder, according to OpenGate.
“That has value to several people,” said Marcantetti.