Hyflux loses Middle East but gains Europe

Water treatment company Hyflux announces its first foray into Europe by acquiring 51% of CEPAration B.V. of Netherlands (CEPA) for 1.5 million Euro (S$2.94 million). CEPA, set up in 2001, is a spin-off from a leading Dutch technology institute, Netherlands Organisation for Applied Scientific Research. The company's main operation is in the development, research and distribution of ceramic membranes used in liquid & gas separation. CEPA is also known to be one of the few ceramic membrane manufacturers in the world. From this deal, Hyflux is expected to gain the following:
1) Access to CEPA's modern technologies, and the ability to manufacture ceramic hollow fibre membranes worldwide.
2) Distribution of these ceramic membranes outside Europe.
3) Ability to extend Hyflux's product offerings into Europe.

Hyflux will continue to pay royalty based on annual net sales of ceramic membranes of CEPA, on top of an initial royalty fee. However, the tie-up will bring Hyflux further up the value chain and allows it to maintain a lead over other water treatment companies. This will also increase Hyflux's capabilities which will be beneficial for the long run. Furthermore, from recent news regarding the company, Hyflux seems to be moving towards the distribution and sales of membranes outside of Asia rather than taking up the engineering and building work as it leaves the UAE project. This could be attributed to the inability to control projects overseas, or due to its heavy book orders within Asia.