Current Trends in the European Tank Storage Industry, including M&A implications

Author: Martyn Lyons, Associate Partner, Global PMI Partners UK

The European Tank Storage sector is awash with opportunities that just a few short years ago simply didn’t exist. Whilst conventional biofuels such as biodiesel for blending with diesel fuel and bioethanol for blending with gasoline have been around for some years now, the growth in energy transition and renewable energy products are now providing tank storage companies with new opportunities to diversify their product portfolio and above all else to fill their tanks.

Some key examples are:

• The European Union has set ambitious targets for the deployment of renewable energy; this is driving the growth of the tank storage market for energy transition and renewable fuels such as HVO (Hydrotreated vegetable oil), methanol, ammonia and hydrogen as well as bioethanol and biodiesel. From an M&A perspective, Companies are acquiring other companies to gain access to new technologies and capabilities, as well as to expand their geographic footprint in this growing market. For example, in 2020, Spanish Company Exolum acquired Inter Terminals, which had a substantial portfolio of energy transition and renewable products as well as on site biofuel manufacturing facilities at a number of their sites.
• The need for sustainability and diversity: these concerns are also driving M&A activity in the European tank storage industry. Companies are acquiring other companies to improve diversity in both geographical locations and a wider and more diverse product portfolio. For example, in 2022, Koole Terminals acquired Alkion terminals, substantially expanding their European footprint.
• The consolidation of the industry: The European tank storage industry is becoming increasingly consolidated, as larger companies acquire smaller companies. This is happening for a number of reasons, including the need to achieve economies of scale, to gain access to new markets, and to reduce competition. For example, over the past few years Evos has acquired terminals in the ARA region (Amsterdam, Rotterdam, Antwerp) and also in the Mediterranean region.
• The growth of the LNG market: The European Union is importing increasing amounts of LNG to meet its energy needs, and this is driving the growth of the tank storage market for LNG. Companies are acquiring other companies and forging joint ventures to gain access to new LNG terminals and storage facilities. For example, Vopak and its long-term partner, energy infrastructure company Gasunie, announced in April 2023 that they have entered into an agreement whereby Vopak will acquire 50% of the shares in the EemsEnergyTerminal, an LNG import terminal located in the Eemshaven in the Netherlands. And just last month the JV partners announced FID (final investment decision) to construct a fourth LNG tank of 180,000 cubic meters at the port of Rotterdam and an additional regasification capacity of 4 billion cubic meters per year.

These are just some of the current trends in M&A in European tank storage. The sector is constantly evolving, and new trends are emerging constantly, driven by energy transition and the road to net zero, the growing need for resilience given political uncertainty and volatility and also the need for improved sustainability and diversity.

In addition to the trends mentioned above, there are a number of other factors that are driving M&A activity in the European tank storage industry. These include:

• The increasing complexity of the regulatory environment
• The need to comply with environmental regulations
• The need to invest in new technologies
• The need to expand into new markets

The European tank storage industry is facing a number of challenges, but it is also a dynamic and growing industry. M&A activity is one way that companies are responding to these challenges and seizing opportunities.

A critical output of M&A is the importance of integrating newly acquired Companies. Successful integration is crucial for the future success of the expanded company and business portfolio. Global PMI Partners offers a bespoke and flexible post-merger integration service, see www.gpmip.com, tailored to each client’s specific needs.

Some of the many examples of why integration is so important are:

• work alongside acquirer and target team members to ensure that integration planning wins hearts and minds across both businesses from day one;
• facilitate an aligned view of vision and business strategy, with clarity of integration objectives, for which a programme of work can be defined to deliver, with a clear set of priorities for the roadmap ahead;
• monitor that the businesses continue to deliver, and that the integration does not negatively impact business as usual (‘BAU’);
• provide integration expertise to support, drive and guide integration planning at all levels;
• understand the acquirer and target corporate cultures, providing an outline of desired corporate culture and assist the definition of a change management strategy to retain and/or amend key aspects of culture;
• define and run a governance model for the integration programme (aligned to current corporate governance) that allows speedy decision making regarding operating model, footprint, priorities, quick wins, synergies, resourcing and integration project planning & execution;

Footnote

Martyn Lyons is an Associate Partner and Industry SME for Global PMI Partners in the UK. Martyn has over 35 years of experience in the tank storage industry and was the former CEO of Inter Terminals, one of Europe’s leading tank storage companies. He was also a former President of the UK Tank Storage Association (TSA) and is currently a non-executive director of TSA.

Global PMI Partners is a specialist consulting firm supporting our listed company and private equity clients with their inorganic growth strategies and M&A integrations and divestments. We provide expert, on-demand M&A services and resources, leveraging our market leading M&A approach & methodology.

With a track record of over 500 operational due diligence, acquisition integration, divestment, carve out, growth and transformation projects utilising our global team of 400+ seasoned professionals across UK, EMEA, North America and APAC, Global PMI Partners is adept at helping our clients achieve the desired value from their acquisition, divestment, and other value creation strategies.