Welcome to this in the chair interview with the CIO of Mutares. I'm Neil Shaw, 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, has that played out? Where are you seeing the richest deal flow right now?
Well, thanks a lot for hosting me today, first of all. Lovely. Well, I think it played out very well. So when we met last time, indeed life was good, life was beautiful. It was summer as well. But we made a couple of deals in fact and the environment was very, very helpful. The pipeline was super full and super rich and we have conducted a large deal in the Nordics recently there to highlight maybe one of them.
And then a couple of days back we have signed the transaction with Sabic on the chemical side, which was from a turnover perspective the largest transaction Mutares has ever conducted. So we acquired their ETB business in the US predominantly with a revenue of above two billion a year.
Well, that's significant news. I mean this is the biggest acquisition you've done to date. And two or three interesting elements to it. The sector was interesting, the size, and in particular what I'd love for you to articulate is what made this carve out particularly attractive and also the country exposure I think was interesting. So maybe talk a little bit more about that.
Yeah, sure. So the transaction as such is important for us from a size perspective as you said, from a geographical point of view, but also from a sector. So what I believe is, you know, we invest in turnaround situations, we buy companies in sectors which are in a kind of a transformation where things have happened. So 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 materials in general, it started a little bit off with steel a couple of years back and chemical came now, which is a sector which is in motion so to say. And so there are really a lot of assets, believe me, at the moment on the market, European chemical assets.
But to my view, 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 are done, we have above 70, 75, 80% American exposure or Americas exposure which includes Mexico and Brazil a little bit, but it was predominantly in the US. And then we have two plants here in Europe but this exposure is interesting for us on a geographical basis. We want to grow further in the US, this is our growth market for the next years together with Asia. And then secondly, we want to grow in this material segment because that's in motion at the moment and we want to grow big, right? So the deal, it's roughly $2.4 billion in turnover. This should be something which is not a one time. So we are looking on sizable assets and the deal in Norway as well was a 400, 450 million business. So this is the way forward and this deal is super attractive. I love it.
I mean, I worked with the team day and night for weeks, right? There was no Christmas. There was no New Year. That chemical deal in America.
Let's, I want to build a little bit of context about the US. So I'm aware that you've had a Chicago presence for some time. But clearly there's a signaling there that America is going to become a bigger part of the Mutares story. So walk us through what your expansion plans are for the US.
I mean, you know, 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 for me the US. And 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 for our business is also something which is understandable, right? The market, 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, the US is cash driven and we are cash driven as well. You don't joke around with funny money and book gains and here and there. It's at the end it's cash. And this is why I believe that market is super interesting for us. 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, there is a lot more for us. And obviously on top, we want to have the angle in the US that American corporates who divest somewhere abroad, that we are close to them. Expansion plan in the US is clearly, we are hiring a lot of people also on the operational side at the moment in the US. We will have our office in Chicago and there is a very concrete plan to open a second office. Luckily, unfortunately, the country is so big. You and I like Chicago but I can tell you it's rough in the winter times.
Yeah, you've got the wind coming off the lake. What's things. So look, I mean I want to do a compare and contrast. So as you're looking at the US, what's the US opportunity set look like compared to Europe? Is it similar, bigger, different? And also I think you hinted at it. What's the seller motivation, you know, particularly in carve outs? Is it different to Europe? Is it the same playbook? What should we be aware of?
It's different. And first of all, let's take the Sabic deal we have done, right, with the US exposure. I think there are industries and segments who work in the US while they're not working in Europe anymore. So a typical commodity chemical product you don't produce in Europe. Costs are too high. The Chinese are much better. The plants are too old, capex is too big, so don't do it. This is also, so if you produce special chemicals, yes. But this type of business I would never acquire in Europe because there's no future in my view for commodity products. In the US, they work and so there you have segments, industries 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? 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. So and that's why, you know, and you have industries in the US which work which are already dead in Europe.
Secondly, the deal structure is different. The deal structure is while in Europe you basically, the price of a transaction is basically dictated by the P&L. In the US the price is dictated by the balance sheet. So you have more leverage there. You have more need of investing from the very beginning. But you also have much easier to find debt instruments in order to find. So the deal structure in the US is different than in Europe. So in the US you pay the balance sheet, in Europe you pay the P&L. And then last but not least, I think 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? First of all, you have an issue and you don't want to do it yourself. 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 a closure or whatever cheaper than you can do it or a corporate can do it. And last but not least is also avoiding press, right? And avoiding press in particular, I mean 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 for the bad press, etc., etc. So, it's rather it's easier. You give it to us, you give us money, or you give it us for free, and we do the job. So, the motivation is the same in the US. The deals are completely different. And the segments could be different.
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, potentially a second office. Organizationally, how do you think about it? Is this a standalone profit center? How does it work within Mutares?
No, no, no. I mean we have one P&L in the holding which is just the listed holding. But my expectation is clearly that in five years from now that the US is a contributor to the profitability which is more or less in the range of Europe.
Okay. You last time you talked, you described I think 2025 as a heavy exit year. 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?
Well, we have made a lot of exits in 2025, so the last, or January 2026 when we announced them. So we exited Cardip in the building material segment, we exited Conexus in the telco segment, we exited Fuentes in the logistics segment, we exited Budos in the steel segment. So this was just the exits of quarter four. So also a lot of exits came along the line. I think we hold our promise and I'm quite happy with the development. The exit pipeline this year also seems to be very strong.
Some of the exits have flipped into this year. 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. Exits in the infrastructure environment very attractive at the moment. So this is where we look. Obviously, if you want to exit the retail business, it will be tough to find a buyer.
Yeah. Okay. And how does the process work? So, is there a playbook in terms of moving from optimization to harvesting? How do you think about it?
