Campine NV: A Strategic Play in Europe's Circular Economy with the Ecobat Acquisition

The European battery recycling market is on the brink of a structural boom, driven by the EU's push to secure critical raw materials and reduce reliance on imported metals. Amid this transformation, Campine NV (BRU: CAMP) has positioned itself as a leader through its bold acquisition of Ecobat Resources' French battery recycling assets—a move that delivers immediate capacity gains, operational synergies, and long-term exposure to the circular economy's growth. For investors seeking a leveraged play on Europe's green transition, Campine's stock represents an underappreciated opportunity with asymmetric upside.

The Deal: A Masterstroke in Strategic Synergy

Campine's acquisition of three French facilities—two battery recycling plants and a semi-finished lead manufacturing unit—adds 70,000 tons of annual battery processing capacity, translating to 40,000 tons of refined lead-metal alloys. This is a game-changer for Campine, which previously relied on its Belgian smelter in Beerse to produce 61,000 tons of lead alloys annually. Post-acquisition, total lead capacity will leap to ~100,000 tons, instantly making Campine one of Europe's largest lead recyclers.

But the strategic brilliance lies beyond mere scale. By acquiring Ecobat's French assets, Campine avoids the years-long permitting and regulatory hurdles required to expand smelting capacity in Belgium. This is critical: in an era of stringent environmental regulations, the ability to “plug-and-play” into existing, compliant infrastructure is a rare competitive advantage. The transaction also expands Campine's recovery of antimony, copper, and zinc from battery fractions, aligning with its multi-metal recycling strategy.

EBITDA Synergies: Where the Rubber Meets the Road

The French assets generated €100 million in revenue in 2024 with positive EBITDA, but the real value comes from synergies. Campine plans to integrate Ecobat's underutilized smelting capacity with its Belgian operations, optimizing material flows. For instance:
- Supply Chain Efficiency: Campine's French battery breaker plants (acquired in 2022) will now feed higher-quality battery fractions to Ecobat's French furnaces, reducing reliance on Belgian smelter inputs.
- Cost Arbitrage: The French facilities' lead production costs are expected to undercut Campine's Belgian operations due to localized labor and energy advantages.
- Cross-Selling: The acquired anode manufacturing unit (for zinc and copper industries) opens new revenue streams, leveraging Campine's existing chemical division expertise.

Analysts estimate that full integration could boost EBITDA margins by 200-300 basis points within 18 months. With the EU's Critical Raw Materials Act mandating 10+ recycling targets by 2030, Campine's expanded capacity will be in pole position to capture premium pricing for recovered metals.

Regulatory Tailwinds and Market Demand: The Perfect Storm for Growth

The EU's push for battery passport legislation, carbon border adjustments, and local critical raw material production creates a trifecta of tailwinds for Campine:
1. Antimony Bonanza: Chinese export restrictions have sent antimony prices soaring. Campine's ability to recover antimony from lead-acid batteries positions it to profit from this scarcity.
2. Battery Recycling Mandates: By 2027, the EU will require 16% of lead in new batteries to come from recycled sources—a rule Campine is uniquely poised to dominate.
3. Green Financing: The EU's Battery Alliance and Circular Economy Finance Support mechanisms offer cheap capital for companies scaling recycling infrastructure.

Why Buy Now? The Underappreciated Catalysts

Campine's stock trades at a discount to its peers, with a P/E of 12x versus the sector average of 15x, despite its superior growth profile. Investors have yet to price in:
- The immediate EBITDA uplift from the Ecobat deal (expected to close in July 2025).
- The optionality of antimony pricing: Even a moderate rise in antimony prices could add €10-15 million to annual profits.
- Geopolitical tailwinds: Europe's urgency to decarbonize and secure supply chains will fast-track Campine's regulatory approvals and contracts.

However, historical performance around earnings announcements suggests caution. A backtest of buying Campine on earnings releases and holding for 20 days from 2020-2024 showed an average return of -63.2%, with a maximum drawdown of -81.21%, underscoring the risks of relying on past patterns. This aligns with the strategy's poor Sharpe ratio of -0.81, highlighting its subpar risk-adjusted performance.

With the Ecobat deal now imminent and regulatory tailwinds accelerating, the current environment presents a fundamentally different opportunity.

Risks? Yes, but Manageable

• Regulatory Delays: The deal requires French works council and FDI approvals. However, Campine's proactive stakeholder engagement (e.g., employment retention pledges) mitigates this risk.
• Metal Price Volatility: Lead and antimony prices could dip. But Campine's vertical integration (from recycling to specialty chemicals) buffers against commodity swings.

Final Call: Buy Campine for the Circular Economy's Next Phase

Campine's acquisition isn't just a capacity play—it's a blueprint for dominating Europe's recycling landscape. With €50 million EBITDA guidance for H1 2025, a 10-year backlog of regulatory-driven demand, and a management team executing flawlessly, this stock is primed to outperform.

Actionable Takeaway: Invest in Campine NV now. The stock's valuation is a mirage; once the Ecobat deal closes and synergies materialize, the market will reassess its worth. Don't miss the train.

Disclaimer: This analysis is for informational purposes only. Investors should conduct their own due diligence.