Bush Boake Allen Inc.

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Bush Boake Allen Inc.

7 Mercedes Drive
Montvale, New Jersey 07645
(201) 391-9870
Fax: (201) 391-0860
Web site: http://www.bushboakeallen.com

Public Subsidiary of International Paper Company
Incorporated: 1982
Employees: 1,977
Sales: $485.4 million (1998)
Stock Exchanges: New York
Ticker Symbol: BOA
NAIC: 31193 Flavoring Syrup & Concentrate Manufacturing; 311942 Spice & Extract Manufacturing; 325998 All Other Miscellaneous Chemical Product & Preparation Manufacturing

Bush Boake Allen Inc. manufactures flavor and fragrance chemicals and aroma chemicals for the food, beverage, pharmaceutical, and household products industries. The flavorings, including essential oils, seasonings, and spice extracts, impart a desired taste and smell to a broad range of consumer products, such as snack foods, confections, soft drinks, and alcoholic beverages. The fragrance products appear in soaps, detergents, air fresheners, cleaners, cosmetics, toiletries, and related products. BBAs aroma chemicals are primarily used as raw materials in fragrance compounds. The company, in 1998, had operations in 39 countries. It was 68 percent owned by International Paper Company in 1999.

British Antecedents: 18331982

Albright & Wilson Ltd., a British chemicals manufacturer, founded Bush Boake Allen, Ltd. in 1966 by merging W.J. Bush Ltd., A. Boake Roberts Ltd., and Stafford Allen Ltd. These three companies dated back to the 19th century, with the oldest founded in 1833. Bush specialized in liquid flavors, Boake in aroma chemicals and fragrances, and Allen in spices and seasonings. Based in London, BBA had sales of about $90 million in 1978, the year it purchased Monsanto Flavor/Essence, Inc. of Montvale, New Jersey, and Patchogue, New York. Parent Monsanto Company had entered the flavors and fragrances business in 1968, when it purchased George Lueders & Co.

Bush Boake Allen was already a large-scale producer of fragrance synthetics from pinene, a compound derived from sulfate turpentine. The acquisition of Monsanto Flavor/Essence, which had annual sales of about $12 million, gave it access to more synthetic aroma-chemicals technology and rights to Vellex malodor counteractants, a product line seen as having great growth potential. BBA had sales of $125 million in 1981.

Union Camp Subsidiary: 198294

The following year, Tenneco Inc., which had acquired Albright & Wilson in 1978, sold BBA to Union Camp Corporation, a diversified U.S. manufacturer which made its purchase a wholly owned subsidiary.

Bush Boake Allen had, at this time, 13 manufacturing or compounding facilities on five continents. Its operations were a good fit for Union Camps own aroma chemicals business, which was based on distilling crude sulfate turpentine into intermediate terpene fractions and aroma chemical precursors. The addition of BBA gave Union Camp greater manufacturing capability to produce a broad range of these chemicals.

With regard to food flavors, local tastes and customs in individual countries as well as a host of different government regulations had to be taken into account. Fragrance markets tended to be more uniform, but considerable creativity was needed to gain acceptance for a new fragrance. Both flavors and fragrances required extensive technical, analytical, and service backup. Bush Boake Allen had testing facilities that included a bakery, small-scale ice cream and soft drink plants, a meat processing operation, and an experimental kitchen, in order to test, as close to true production conditions as possible, the behavior of a particular flavor in the medium for which it was prepared.

A large part of Bush Boake Allens development activity in aroma chemicals was taking place in London and at a plant in Widnes, England, where operations began in 1958. Sophisticated instrumental analysis was being employed, including chromatography, mass spectroscopy, and nuclear magnetic resonance in order to isolate and identify constituents of both natural and synthetic materials. This work led to the synthesis of these materials into flavor and fragrance ingredients that could be produced to exacting standards. Although many natural aroma materials were still being employed in compounding flavors and fragrances, pinene-derived synthetic chemicals of the type produced in distillation plants both at Widnes and Union Camps facility in Jacksonville, Florida, were playing an increasingly dominant role.

Bush Boake Allens Widnes plant also was producing aroma chemicals from hydrocarbon feedstocks. An expansion of this facilitynot completed until 1994was authorized in 1986 to provide increased production of Lilestralis, BBAs brand name for a non-turpentine, lily aldehyde aroma chemical of perfumery quality for use in a range of toiletry and household products. BBA also was producing, at other locations in England, continental Europe, the Americas, and the Far East, a wide variety of spice products and essential oils (such as citrus and mint) from natural ingredients (such as vanilla and fruit extracts). The BBA division was the largest of Union Camps chemical group, which had sales of $404 million in 1988.

By this time BBA was the largest processor of turpentine in the world, separating sulfate turpentine into its major components, alpha pinene and beta pinene, at Jacksonville, and then further processing the fractions at Jacksonville and Widnes. Alpha pinene was a source of pine oil used in household cleaners and disinfectants and also was being upgraded into other specialized products. Beta pinene was being used in the production of synthetic aroma chemicals such as geraniol, citronellol, and citral.

During the 1980s Bush Boake Allen expanded its network of flavor and fragrance facilities in order to bring its services closer to local markets throughout the world. It had a presence in 21 countries in 1984 and 23 in 1986. In 1987 it opened new facilities in Jamaica, Japan, and Thailand, and it also acquired Grundy Thompson, an Australian powdered-flavor company. The following year it opened a new facility in Italy. In all, 13 such facilities were opened during the decade, including six in 1988 and 1989, and more were pending for the Middle East, South America, and the Pacific Rim.

Bush Boake Allen greatly broadened its position in the United States by acquiring, in 1990, Chicago-based Food Materials Corp., a producer of flavor compounds and vanilla extract. In 1992 it purchased Texas Laboratories, a leading maker of custom seasoning blends for the snack food and food processing industries with plants in Carrollton, Texas, and Norwood, New Jersey. The purchase price was about $5.9 million. BBAs presence abroad also continued to increase, extending to 27 countries in 1991 and 30 in 1992. The division had record revenues of $336.3 million and record net income of $20.6 million in 1993.

Bush Boake Allens plans called for further expansion by acquisition and for a greater penetration of two hot markets: Asia and South America. The division was also giving high priority to development of new synthetic musks, improved industrial reodorants, an extended line of dairy flavors, and production of enzyme-modified cheese products with wide application in many processed foods. Union Camp decided that commitment of the necessary funds would be met by selling about 30 percent of BBAs shares to the public.

Public Company: 199499

In 1994 5.6 million shares of Bush Boake Allen stock were sold at $16 a share, raising about $84 million in funds for the newly public company, which moved its headquarters from London to Montvale, New Jersey. Its a risky move, a fragrance industry executive told Matthew Gallagher of Chemical Market Reporter. This business is very secretive and given the necessity of releasing a prospectus as a part of going public, all sorts of sensitive information is out there for scrutinyincluding sales revenue, market share, profit margin, and corporate strategies.

Bush Boake Allen registered record revenues and net income in 1994, 1995, and 1996, when it was the seventh largest in its industry. Flavors were the companys major sector, accounting for 58 percent of sales in 1996. Of this sum, snack and processed foods, beverages, and confectionery and bakery accounted for 79 percent. Aroma chemicals accounted for 25 percent of the companys sales and fragrances for the remaining 17 percent. Of BBAs fragrances, sales for cleaners and air fresheners accounted for 39 percent, soaps and detergents for 30 percent, and cosmetics and toiletries for 23 percent. BBA was the largest worldwide producer of pine oil. Fine fragrances for colognes and perfumes accounted for eight percent.

Bush Boake Allen earmarked $22.5 million for research and development in 1996. The companys Generessence program allowed researchers to isolate and synthesize totally new aroma chemicals for the exclusive use of the companys perfumers and flavorists. BBA also was engaged in developing several processes intended to enhance its position as an integrated producer of vanilla.

Interviewed for BUSINESS News New Jersey in 1997, Bush Boake Allen chief executive Julian Boyden said, It takes about as long to develop a good perfumer as it does a good brain surgeon.... You have to be able to identify about 2,000 chemicals by smell and/or taste. It takes about 10 years to build up that skill. He added that because fat is the biggest modifier of taste, the popularity of low-fat foods was creating a lot of work in developing low-fat and fat-free foods that would taste as good or the same as foods with more fat in them.

Bush Boake Allen was, in 1997, the worlds leading producer of geraniol and Lilestralis as well as pine oil. Hoping to become the premier supplier of aroma chemicals, the company was planning to build an aroma-chemical plant outside of Madras, India, increase geraniol capacity at its Jacksonville plant, and increase its production of petrochemical-based aroma chemicals in Widnes. BBA was the first company to produce aroma chemicals both from terpene and petrochemicals. Widnes had made a shift from turpentine-based aroma chemicals to petroleum-derived ones, such as the ones marketed under the Lilestralis, Abbalide, and Boisvelone trade names, thereby leaving BBA less dependent on turpentine supplies, which varied in quantity according to cyclical production in the paper industry.

Bush Boake Allens 1997 revenues rose to $491 million, but its net income slipped slightly to $31 million. In 1998, although revenues dropped to $485 million, net income was a record $33.7 million. Interviewed by Peter Landau of Chemical Marketing Reporter in early 1999, Boy den said that in the fragrance industry, the margins have certainly gotten tougher over the last 10 years or so. He said that in the flavor business, the firms ambition was to build on higher-value compound flavors, such as state-of-the-art spray-dried products. Boy den added, Were also investing more on the biotech side of our business, looking particularly at dairy flavors at our operation in Wisconsin, developing a range of enhanced dairy flavors, as well as increased natural products from physical separation.

In 1998 Bush Boake Allen opened a major production facility in Istanbul, Turkey, and its first Mexican plant. It had manufacturing and compounding facilities in 15 countries at the end of the year. In addition to the Jacksonville and Widnes plants for aroma chemicals, BBA had a production center for seasonings at Carrollton, Texas, and one for both seasonings and essential oils at Long Melford, England. The company also had 43 laboratories. BBA spent $25.2 million on research and development during 1998.

Bush Boake Allen was constantly creating new compounds in order to meet the many and changing characteristics of its customers end products. Its flavor products also included essential oils, natural extracts, spice extracts, and seasonings derived from fruits, vegetables, nuts, herbs, and spices as well as ingredients enhanced by enzymes. These were being sold in liquid, powder, and paste forms. Sweet flavors included a full range of fruit flavors as well as flavors such as vanilla, coffee, chocolate, and cola. Savory flavors included meat, cheese, and fish flavors. BBA also was producing flavors for specific applications, principally in the tea, oral-hygiene, and pharmaceutical industries. Bush Boake Allens range of fragrance products included a line of compounds based on extensive analysis of scents from living plants and flowers, marketed under the Generessence trade name.

Sales of flavor compounds accounted for about 35 percent of Bush Boake Allens net sales in 1998. Sales of fragrances (excluding the resale of aroma chemicals) accounted for 19 percent, and sales of aroma chemicals, 24 percent. Sales of natural products used as flavoring items in their own right and also as raw materials for fragrances and compounding flavors accounted for the remaining 22 percent. International Paper Company became the majority stockholder of Bush Boake Allen when it purchased Union Camp in 1999.

Principal Subsidiaries

Bush Boake Allen Australia Ltd.; Bush Boake Allen Canada Inc.; Bush Boake Allen (Chile) S.A.; Bush Boake Allen Colombia S.A.; Bush Boake Allen Controladora S.A. de C.V. (Mexico); Bush Boake Allen España S.A. (Spain); Bush Boake Allen (Executive Pension Trustees) Limited (U.K.); Bush Boake Allen Industrias E Comercial do Brasil Limitada; Bush Boake Allen Limited (U.K.); Bush Boake Allen (Nominees) Limited (U.K.); Bush Boake Allen Pension Investments Limited (U.K.); Bush Boake Allen (Pension Trustees) Limited (U.K.); Bush Boake Allen Servicios S.A. de C.V. (Mexico); Bush Boake Allen (Works Pension Trustees) Limited (U.K.); GHS Proteins Limited (U.K.); WJ. Bush & Co., Inc.

Principal Operating Units

Aroma and Terpene Chemicals; Americas Region; Asia Pacific Region; Europe Region; International Region.

Further Reading

A&W, $700M in Sales Now, Eyes New Areas and Businesses, But Remains in What It Knows, Chemical Marketing Reporter, January 22, 1979, pp. 5, 24.

Floreno, Anthony, BBA Broadens Global Reach with Addition of Indian Plant, Chemical Market Reporter, November 24, 1997, pp. 1, 15.

_____, Bush Boake Allen Aims for the F&F Big Leagues, Chemical Market Reporter, August 11, 1997, pp. 5, 24.

Interview: Julian Boyden, BUSINESS News New Jersey, August 11, 1997, p. 27.

Landau, Peter, Executive Q&A, Chemical Marketing Reporter, February 18, 1999, p. 18.

Union Camp Sells BBA Stock, Chemical Marketing Reporter, March 21, 1994, pp. 7, 18.

Robert Halasz