Sulzer to Spin off Applicator Systems Division

Sulzer Ltd announces the intention to spin-off its Applicator Systems (APS) division through a 1:1 share split, granting Sulzer shareholders one APS share in addition to each Sulzer share held.
Sulzer to Spin off Applicator Systems Division

Image source: Sulzer Ltd.

The listing of APS on the Swiss Exchange (SIX) is planned for late Q3 or early Q4. Upon market introduction, APS will be renamed medmix and its listing will be combined with a share capital increase by medmix in the amount of CHF 200-300m without subscription rights for existing shareholders. The capital increase is expected to fund organic and inorganic growth, increase trading liquidity through a higher free float and introduce new, healthcare-focused investors to medmix.

The separation will leverage the full potential of two distinct businesses: Sulzer, a flow control business for water, energy, chemical and industrial infrastructure, and medmix, a delivery device business serving healthcare, industrial and consumer markets. This renewed focus is expected to accelerate the growth of both companies.

Sulzer Chairman Peter Löscher stated: “The Board of Directors of Sulzer is excited to bring medmix to the market. Its rapid development over the last few years, and the anticipated growth of its healthcare platform, make this the right time to do so. Our flow control businesses demonstrated their resilience in 2020, and they are having a strong start to 2021. Sulzer will be able to increase its capital allocation towards water, industry and aftermarket in pumps, while capitalizing on the strength of its renewable technologies portfolio in Chemtech. All stakeholders will benefit.”

Attractive investment propositions
Sulzer, through almost two centuries of existence, has a track record of successfully incubating promising ventures and developing them to become market leaders.

medmix accelerated its transformation over the past five years to become a global market leader in high-precision delivery devices for the healthcare, consumer and industrial segments. It is well positioned to capture profitable growth opportunities in its markets, which are driven by mega trends and high entry barriers. medmix employs 1’900 people worldwide with expected sales of around CHF 450m in the current year and an adjusted EBITDA margin (corresponds to operational profitability (opEBITA margin) of around 19% in 2021 and above 20% in 2022) of around 25%. It expects to return to its pre-pandemic EBITDA margin of above 26% in 2022. medmix expects to continue its positive development by growing faster than its end markets and increasing its revenue mix towards healthcare, to reach its mid-term EBITDA margin target of around 30%.

medmix is a historical APS brand, which was chosen as the new name for all of APS as it underscores its shift towards healthcare – drug delivery, surgery and dental together already represent more than half the APS profits – while acknowledging its founding Mixpac dental and industrial franchise.

Sulzer, after the medmix spin-off, will renew its focus on industrial flow control and separation technology. For 2021 excluding medmix, Sulzer expects to deliver revenues of CHF 3bn at an operational EBITA margin of around 9%, with a mid-term EBITA margin target range of 10-11% on the back of a continuous push towards water and industrial applications in pumps, biopolymers and recycling processes in separation and an acceleration of the growth of aftermarket activities, which already represent today approximately half of the revenue base. Water is Sulzer’s largest pump segment and is expected to continue growing faster than its market. As a focused and agile player in sectors that should consolidate, Sulzer is excited about future opportunities.

CEO Gregoire Poux-Guillaume stated: “APS has grown from a Sulzer start-up to a global leader in precision delivery devices. It is an exciting business with tremendous value creation opportunities. We actively manage our portfolio and always evaluate the opportunity of giving our businesses a future of their own when they reach a level of maturity to thrive standalone, or when we are no longer the best owner. We have reached this moment with APS, which is substantially undervalued as part of Sulzer. The renewed focus of both Sulzer and APS, soon to be medmix, will create significant value for our customers, employees and shareholders.”

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