NR2306

NEWS RELEASE                                                                                  DECEMBER 2016

Filtration Market Rankings Change with Two Acquisitions

Two significant mergers in the filtration industry have taken place in the last month.  Lydall has acquired Gutsche and Parker Hannifin has acquired Clarcor. Lydall’s acquisition is relatively small but their increase in market share is large.  Parker Hannifin’s acquisition is large but their increase in market share is relatively small.  One reason for this is that Lydall is nearer the beginning of the supply chain where total revenues are less.  The second reason is that Lydall has focused on a niche market, whereas the Parker acquisition is much broader based.

Lydall, Inc. has entered an agreement to acquire MGF Gutsche GmbH & Co. KG (“Gutsche”) for approximately $58 million in cash.    The business consists of operations in Germany and China. Gutsche’s fiscal year ends on December 31, 2016 and revenue and EBITDA for these operations are forecasted by Gutsche to be approximately $50 million and $6 million, respectively.

Lydall has recently acquired Texcel and they purchased Andrew several years ago. These previous acquisitions plus Gutsche are providing Lydall with a market share approaching 20 percent in high performance non-woven media for fabric filters.

Fabric Filter Bag and Media Revenues 2016   $ Millions
Bags 3,000
Media 1,680
High Performance Non-Woven Media  800
Lydall High Performance Non-Woven Media 90-120
Gutsche High Performance Non-Woven Media 45
Total High Performance Non-Woven Media 135-165
 Lydall % of High Performance Non-Woven Media 17-20%

Other competitors in the high performance non-woven area for fabric filters are BWF, Xiamen Savings and Testori. An increasing number of Asian suppliers have also entered the market.

Parker Hannifin will acquire Clarcor for $4.3 billion. Clarcor is a diversified manufacturer of mobile, industrial and environmental filtration products with annual sales of approximately $1.4 billion and 6000 employees worldwide. Clarcor brands include Clarcor, Baldwin, Fuel Manager, PECOFacet, Airguard, Altair, BHA, Clearcurrent, Clark Filter, Hastings, United Air Specialists, Keddeg and Purolator. The acquisition of Clarcor adds a broad range of industrial air and liquid filtration products and technologies to Parker Hannifin’s filtration portfolio. With approximately 80 percent of Clarcor’s revenue generated through aftermarket sales, the acquisition is expected to significantly increase recurring revenue in Parker Hannifin’s Filtration Group.

Filtration Revenues 2016 $ millions
Segment Total Filtration

Mobile, Hydraulic

Compressed Air

Industrial/

Environmental

Clarcor Revenue 2015 1400 590 810
Parker Filtration and Engineered Materials 2500 2300 200
Total Filtration 3900 2890 1010
Market Share 3% 6% 2%
Gas Turbine Inlet Air 100   100
Gas Turbine Market Share 18%   18%
Process Liquid Filtration 100   100
Market Share 2%   2%

The combined company has full portfolios in some segments of filtration and partial in others and is not a player in many segments.

Parker Clarcor Combination
Filter Type Portfolio Coverage Market Ranking
Fuel Filters - Mobile 100% High
Oil Filters - Mobile 75% High
Air Filters - Mobile 75% High
Hydraulic Filters - Industrial 100% High
Industrial HVAC 100% High
Compressed Air 100% High
Gas Turbine Inlet Air 100% High
Natural Gas Coalescer 100% Medium
Cartridge Filters for Process Liquids and Water 75% Low
Dust Collector Bags 100% High
Catalytic Treatment 10% Low
Scrubbing and Acid Gas Removal 0 Low
Cross Flow Membranes 0 Low
Sedimentation and Centrifugation 0 Low
Liquid Macrofiltration 0 Low

The new Parker will be a leader in dust collector bags.  They buy the roll goods from companies such as Lydall.  Clarcor has moved vertically to manufacture media for HVAC but is a small player in roll goods manufacturing.

Parker has expanded and is a major player in filter elements. It is not competing in system work except in some narrow areas such as gas turbine inlet filtration.  However, because of the fractured nature of the filtration industry, it is a market leader in an expanded number of segments thanks to this acquisition.

The market shares of suppliers are continually tracked in:

1ABC Fabric Filter

2ABC Scrubber/Adsorber/Biofilter Knowledge Systems

3ABC FGD and DeNOx Knowledge Systems

4ABC Electrostatic Precipitator Knowledge Systems

N007 Thermal Catalytic World Air Pollution Markets

N024 Cartridge Filters: World Market

N020 RO, UF, MF World Market

N006 Liquid Filtration and Media World Markets

N005 Sedimentation and Centrifugation World Markets

N022 Air Filtration and Purification World Market

N035 NOx Control World Market 

N064 Air/Gas/Water/Fluid Treatment and Control: World Market

Coalescer Supplier Program  http://home.mcilvainecompany.com/index.php/markets/28-energy/1124-n065