Wedeco broadens its horizons, analyst comments

Manufacturers of high purification water treatment systems will have cast a nervous glance in the direction of Wedeco this week as it acquired Trailigaz Ozone from Vivendi Water Systems.

By Matthew Barker, Industry Analyst, Frost & Sullivan's European Water Group

London, March 28, 2003 -- Manufacturers of high purification water treatment systems will have cast a nervous glance in the direction of Wedeco this week as it acquired Trailigaz Ozone from Vivendi Water Systems.

Wedeco is currently one of the top players in the global ultraviolet water and wastewater disinfection equipment market, certainly holding a number one position in the European market. It has been involved in ozone water treatment as well for a number of years, albeit on a much smaller scale. Wedeco has in the past largely concentrated its expansion plans around the UV sector although it's increasingly looking towards dominating the ozonation sector.

Initially, Wedeco's main corporate goal is to double its market share in the UV disinfection market between 2000 and 2005. As an initial stage of achieving this target, the company strengthened its position through the joint venture between Wedeco UV Verfahrenstechnik GmbH and Katadyn UV of Switzerland to form Wedeco AG Water Technology in 1999 before its IPO in October 1999. One of the key drivers behind Wedeco's success is the sensible and focused expansion of the company through the acquisition of strategically placed UV competitors in the market.

The year 2000 saw mainly expansion and acquisitions in the European UV market. Having bought Katadyn in 1999, the US based Ideal Horizons in January 2000, and Austrian Visa UV Technologie GmbH in March 2000, Wedeco purchased 100 percent of the UK-based UV Systems plc in May 2000. With the company's main aim being to become world leader in the field of UV technology, Wedeco was further strengthened in late July 2000 by the acquisition of Rex Iberica SA of Spain and that of Puro Srl of Italy in September 2000. The formation of Wedeco Rex proved to be important for the worldwide expansion of the company into the South American markets.

Following expansion in the European market, the company aimed to expand into the world scene, particularly into South America and Southeast Asia. May 2001 saw the acquisition of two companies: Wedeco Sung Jin Co. Ltd of Korea and Wedeco WWT Watertech Ltd of New Zealand as well as the creation of subsidiary offices in Brazil and Singapore. In Europe, Wedeco created office in the Benelux region.

Wedeco's North American ozonation subsidiary PCI Wedeco was formed in 1997 and has become one of North America's leading ozone system suppliers and in February 2002 the company signalled its intentions to really push into the ozone market through the acquisition of Wedeco Gesellschaft für Umwelttechnologie mbH (Wedeco UWT) from WBL Holding GmbH. WBL is also the main shareholder in Wedeco AG. Now, with the purchase of Trailigaz from Vivendi Water Systems, Wedeco will undoubtedly become one of the top players in the global ozonation market. In return, Vivendi Water Systems will obtain a 15.2 percent interest in the Wedeco ozone subsidiary. UV and ozonation are increasingly being favoured over chlorination for the disinfection of water and wastewater.

Initially, Wedeco, along with key competitor Trojan, remained dedicated to its focus on ultraviolet technologies, but is now also a strong player in the ozone systems market, while other competitors, such as BWT and Prominent Dosiertechnik, have moved towards offering a complete technology range.

Other competitors in the water and wastewater treatment equipment market can learn the following lessons from Wedeco's strategies and experiences:

-In spite of recent consolidation in the maturing European water and wastewater treatment equipment markets, it is still possible for niche suppliers to thrive and grow through the use of strategic positioning, geographic coverage and strong marketing

-Wedeco largely dedicated its focus on the market for ultraviolet disinfection equipment. As such, it has remained entirely committed to becoming number one in this specialised market. It now appears to be applying a similar approach to the ozone systems market.

-Proactive sales and marketing strategies are essential for penetrating emerging marketplaces such as that of ultraviolet disinfection

-Overseas acquisition of successful incumbent suppliers with recognised strong brand names facilitates international expansion, while also bringing access to established and proven distribution channels

Background

Frost & Sullivan is an international marketing consulting company that monitors a comprehensive spectrum of high-tech markets for trends, market measurements and strategies. This ongoing research is utilised to complement a series of research publications to support industry participants with customised consulting needs. Interviews and free executive summaries are available to the press.

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