De.mem says it has signed a binding agreement to acquire 75% of the shares in Geutec Umwelt- und Abwassertechnik GmbH, an industrial wastewater treatment company based in Essen, Germany.

The A$915,000 ($620,140) cash deal provides a platform for De.mem to roll-out its membrane technologies into the German and European industrial wastewater treatment markets Geutec currently supplies wastewater treatment products and solutions to, the ASX-listed firm said. This includes small and medium sized companies and several multinational corporations from the heavy industrial, plating and metals processing industries.

Geutec’s solutions are based on a range of proprietary chemical formulations that have been developed and optimised over decades of operation, De.mem said. The manufacturing of these chemicals is performed in Germany but could eventually be expanded by De.mem into its Australia or Asia locations, the company noted.

Following the acquisition of Geutec, De.mem intends to set up a Chemicals Division across the group’s different locations so that it can intensify its sales efforts for water treatment chemicals based on the proprietary product range of Geutec. In addition to supplying mining, resources and heavy industrial sectors in Australia, there are strong opportunities also in Asia, with its large manufacturing sector, De.mem said.

The company said: “Geutec’s chemicals are highly complementary to De.mem’s innovative membrane-based water treatment products, the core of De.mem Group’s intellectual property.”

De.mem manufactures a range of hollow-fibre membrane technologies at its factories in Singapore and Australia. The membranes and membrane modules produced are the key components in many of the company’s turnkey water and wastewater treatment plants.

“There is strong demand from De.mem’s existing customer base for Geutec’s chemicals products,” De.mem said. “Chemicals such as coagulants and flocculants, cleaners and anti-scalants are often requested by customers in conjunction with membrane-based water treatment. Chemicals are also typically requested by customers as a follow-up to De.mem’s equipment sales.”

In Australia alone, De.mem has already sold around A$450,000 in chemicals over the 12 months ended June 30, 2019. But, to date, De.mem has limited its chemicals sales to a small number of mining and industrial sites because its chemicals have been supplied to De.mem by third parties.

“The acquisition of Geutec will not only allow De.mem to supply additional customers with a broader range of chemical products, but also to increase its margins in this segment,” it said.

Completion of the deal is subject to payment of the purchase price and expected within the next week, De.mem said. Immediately following the transaction, Geutec GmbH will be re-named De.mem-Geutec GmbH.

Andreas Kroell, CEO of De.mem Group, said: “The acquisition of Geutec GmbH provides a logical expansion of De.mem’s product range into the supply of industrial chemicals for water and wastewater treatment. Furthermore, the acquisition further diversifies our revenues and provides growth options in the German and European industrial wastewater treatment markets.”

Uwe Graessel, Founder, Owner and Managing Director of Geutec GmbH, said: “Our existing customers can benefit from the wider De.mem product offering and we look forward to supplying our innovative chemicals solutions to De.mem’s customers globally. We see significant opportunities given the extended range of products and capabilities.”