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The heavily indebted conglomerate Chem China must downsize. The alleged sale of the traditional company Netstal would only be a small transaction for the state giant.
Among other things, the Netstal company produces systems for injection molding cannulas for syringes and pipettes.
For the roughly 400 employees at Glarus’ Netstal mechanical engineering company, it would be the sixth ownership change in less than 20 years. As the Reuters news agency writes with reference to reported circles, the current owner, the Chinese state company Chem China, plans to sell the traditional company with a history of more than 150 years. Negotiations with a potential buyer are said to be “well advanced”.
Chinese ownership since 2016
At NZZ’s request, neither Netstal’s management nor Munich’s mechanical engineering group Kraus Maffei, through whose acquisition Chem China had also passed into the hands of Netstal in 2016, wanted to comment on the speculation. For his part, Kraus Maffei had acquired the company from Näfels in 1992, before it was switched from one financial investor to another several times since 2002.
With Chem China, the Kraus-Maffei Group and with it Netstal have long again received an owner with industrial experience. The state-owned company, whose sphere of influence also includes the Basel agrochemical company Syngenta, has a reputation for being heavily in debt after an extensive buying spree. According to rating agency Fitch, the company’s debt has been more than ten times its free cash flow since the costly Syngenta acquisition. The Chinese had spent $ 43 billion on Syngenta in 2017 alone. Another costly acquisition was the purchase of Italian tire maker Pirelli, which gobbled up more than $ 7 billion in 2015.
According to Reuters, a sale of the comparatively small company Netstal should bring Chem China between $ 200 million and $ 300 million. However, such a transaction would be in line with the expectation that the company will divest various interests in the interest of reduction. According to Fitch’s credit watchdog, this could even include the sale of Syngenta.
As Renzo Davatz, managing director of Netstal, explains, the rumor that Chem China is considering selling the company has surfaced several times in recent years. So far it has not come true. Davatz also confirms that direct owner Kraus Maffei has repeatedly examined all strategic options, including the sale of Netstal.
Doing business with coronavirus testing centers
When it comes to today’s business environment, Netstal, like most mechanical engineering companies, is feeling a greater reluctance to invest among its clients. The company produces systems for the injection molding of plastic containers used in the food and beverage industry, as well as cannulas for syringes and pipettes. The latter are selling well due to their use in testing centers for Sars-CoV-2 infections. Fortunately, according to Davatz, medical technology largely makes up for what Netstal currently lacks in stimulus in other business areas.
