M&A Special

Blue Cap acquired Neschen, based in Lower Saxony, out of insolvency in 2016. The recently announced exit marks the end of a journey that was characterized by various stages and is also a good example of the implementation of our strategy. In this article, we would like to look back on the past few years and show you how we have developed the company since then with targeted transformation measures.

Support and measures after the takeover
An important investment criterion for Blue Cap is recognizable potential for transformation and value enhancement. When we took over Neschen and its trading subsidiaries as part of an asset deal in 2016, there were clear starting points for bringing our experience and expertise to.

At the beginning of our entry, we carried out rationalization measures such as merging two locations. We also focused on the further development of the Industrial Applications segment. This was later followed by the expansion of European sales, including a new location in Switzerland, and expansion into the US market. In 2022, there were changes in management: Nils A. Honscha became Managing Director.

Extensive turnaround program in 2023
At the beginning of last year, we responded to customers' de-stocking measures, the incipient economic slowdown and an emerging sales gap with a fitness program. The measures mainly included cost-saving measures in the areas of personnel and material costs, strengthening sales and intensifying working capital management. Thanks to consistent implementation, the results were already clearly visible in earnings in the second half of 2023. At the same time, the order volume in the Industrial Applications and Documents divisions increased significantly again. By means of the previously implemented efficiency enhancement measures, Neschen was able to cope with the rising volume without any problems and the favorable cost structures benefited disproportionately from the increase in sales. For more detailed information on the fitness program at Neschen, please also read the related story in our Annual Report 2023, page 14 f).

Developments in 2024 and exit
The success of the fitness program and the positive development of Neschen are clearly reflected in the key financial indicators. As part of the regular review of the portfolio companies under our best-owner approach, the decision was made that a sensible exit point had been reached with the demonstrably successful turnaround. However, the next stage of development, which includes the establishment of new sales structures and the development of new target markets, requires measures whose effects will only become visible after a few years. At this point, a strategic investor is better positioned than Blue Cap, as it can use existing structures and synergy potential to drive forward further development more efficiently and with less risk.

At the beginning of this year, the Blue Cap and Neschen teams therefore focused on ensuring exit readiness and safeguarding the success of the transformation during the M&A process. At the end of the structured process, we were able to achieve an excellent result in a still challenging environment by selling our 100% investment to ATP adhesive systems AG, a strategic investor. The total proceeds (before taxes) are in the double-digit million range and around 10% above the net asset value valuation as at June 30, 2024. The sale generated a very attractive return on invested capital (internal rate of return) of 44% per year and a money multiple on the capital employed of around 8x.

Buyer expands its product portfolio with the acquisition of Neschen
ATP adhesive systems AG specializes in the development and manufacture of customer-specific adhesive tape solutions. With production sites in Germany, the USA and the United Kingdom as well as its headquarters in Switzerland, ATP serves a wide range of industries and offers customized adhesive solutions that meet the highest standards of sustainability and quality. With this strategic acquisition, ATP is expanding its production capacities and opening up new markets with an increased product range. On the other hand, the company strengthens its position as a leading provider of environmentally friendly adhesive technologies, as both Neschen and ATP have a strong focus on sustainable products. We are confident that ATP is the perfect new owner for Neschen and wish both companies all the best for their future together.