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5 Boulevard Malesherbes
75008 Paris
(1) 49-24-40-00
Fax: (1) 49-24-41-00

Public Company
Incorporated: 1925 as Pricel
Employees: 11,463
Sales: F10.32 billion (US$2.17 billion)
Stock Exchanges: Paris

Chargeurs is one of the largest industrial holding companies in France, with interests in several high-growth areas, notably entertainment and textiles. Until 1988 the company was also firmly entrenched in the transportation industry, with a historical presence in the shipping business under the name Chargeurs Réunis, a controlling interest in UTA (Union des Transports Aériens, Frances second largest commercial airline). With the sale of both these businesses in 1988 and 1990 respectively, Chargeurs streamlined its portfolio dramatically, while establishing that its priorities for the 1990s would be the textile business and the relatively new field of media communications. The international character of the company is undeniable. In 1991, Chargeurs had a presence on all five continents with holdings of over 150 operating companies. In the same year, 69 percent of revenues came from sources outside France.

Chargeurs S.A., as the company was known until 1989 when shareholders voted to change its name to Chargeurs, was the result of a merger in 1981 between the textile giant Pricel and the shipping company Chargeurs Réunis. Both concerns had illustrious histories in their respective fields, and both contributed to the culture of the new company.

Founded in 1925, Pricel quickly developed into one of the most powerful textile groups in France. The companys success was built on chemical-based synthetic fabrics, primarily viscose, which provided a cheap if less durable alternative to natural fabrics. However, in 1961 Pricel, previously known as Celtex, transferred 80 percent of its holdings in synthetics to Rhône-Poulenc S.A., in exchange for five million Rhône-Poulenc shares. From that time Pricel operated as a holding rather than as an operating company, with a large number of industrial and financial operations in France and abroad. Important subsidiaries included textile company Gillet-Thaon and wool company Lainiére de Picardie. Moreover, the viscose connection had not been completely severed and Pricel still had interests in concerns such as Spontex, Paris, and the Viscose Development Company of Great Britain. In addition, Pricel had owned some Chargeurs Réunis stock since 1974. However, in 1980, Pricels share in Chargeurs Réunis increased substantially, a move that foreshadowed the merger of the two companies.

Chargeurs Réunis, for its part, was founded in 1872 as a shipping company, which diversified early into the fledgling air industry in 1929. It expanded its interest in commercial airlines after the Second World War, with the creation of the Aeromaritime Transport Union (Union Aéromaritime de Transport), or UAT, which began a commercial service between Paris and Central Africa as early as 1949. The company was able to take advantage of Frances colonial connections to develop routes to out-of-the-way destinations, and under its new name UTA (Union des Transports Aériens), it eventually became Frances second largest airline after the national carrier Air France. Chargeurs Réunis also controlled a number of financial and real estate concerns that provided specialized services to the parent company. At the time of the merger, Chargeurs Réunis was a holding company whose important subsidiaries included, in addition to those mentioned above, Paquet Cruises Inc. of New York and Miami, and shipping freight companies such as the Nouvelle Compagnie de Paquebots.

According to contemporary press reports, the man who orchestrated the merger of Pricel and Chargeurs Réunis was Jerome Seydoux, chairman of Pricel. Developments after the merger would seem to bear this out; indeed, Seydoux is credited with most of the strategic decisions that changed the structure and character of Chargeurs in the late 1980s. Seydoux came to Pricel from oil and engineering giant Schlumberger, where he had served for many years. The experience at Schlumberger is credited with giving him the taste for restructuring that he exercised to great effect at Chargeurs. The merger took place in 1981 and Seydoux was subsequently appointed president and chief executive officer. Although the new company retained the name Chargeurs, the merger was in effect an absorption by Pricel of the former Chargeurs Réunis, and the latter was certainly more affected by the restructuring effort.

From the outset, Seydoux made it clear that the shipping and land transport sectors of the business caused him most concern. For a number of years revenue in these areas had been lackluster, due largely to an imbalance between supply and demand. Too many freight vessels were simply chasing too much cargo. Seydoux responded by overhauling a number of vessels in the companys flagship operation CMCR (Compagnie Maritime des Chargeurs Réunis) in an attempt to make them more competitive. Nevertheless, by the mid 1980s freight services were still showing a loss, and even the cruise line Paquet Cruises Inc. was failing in its efforts to differentiate itself in the North American market by emphasizing its French flavor. Keen to consolidate his position in the more profitable textile industry, in late 1986 Seydoux attempted to cut his shipping losses by selling Chargeurs Réunis to the state-owned General Shipping Company (Compagnie Genérale Maritime). Unfortunately, the move came at a time when the French government was in the grip of a privatization drive, and the Secretary of State therefore rejected Chargeurs request on the grounds that, if anything, it smacked of nationalization, rather than privatization.

Undaunted, Seydoux succeeded over the next two years in gradually selling off most of his peripheral shipping concerns. Bulk freight vessels were sold to Louis Dreyfus and the Far Eastern line to the Danish company Maersk. Finally, in January of 1988, Chargeurs announced the sale of Chargeurs Reunís to the French group Delmas-Vieljeux. The sale added five lines, over ten vessels, and 400 employees to the Delmas-Vieljeux haul. The French government expressed itself satisfied, and congratulated itself on having two major shipping concerns within its borders, one public and one private. For Chargeurs, the sale represented a definitive break with shipping, and a much-needed influx of cash with which to finance expansion into the communications field.

During this time, the air transport division, under the flagship UTA, had been performing respectably. The company had carved out a niche for itself in Africa and the Far East, and the addition of a direct flight between Paris and San Francisco had proved particularly profitable. Nevertheless, opportunities for expansion seemed limited, due mainly to the highly regulated nature of the French airline industry. A government act of 1963, dubbed the Yalta Air agreement by critics of the plan, had effectively divided world routes between UTA and the national carrier Air France, with the competitor Air Inter being given some domestic flights. The protectionist agreement was designed to prevent destructive price competition between the three French companies by giving each its own territory. Under the agreement, for example, UTA flights from Tahiti would stop in Los Angeles, where Air France would take over for the European leg of the trip. As a result of this operating environment, UTA expansion was less than dynamic. The new San Francisco route, inaugurated in 1986, involved intense government lobbying and infuriated Air France, which regarded North America as its rightful property.

The UTA image remained untarnished until 1988, when a dispute arose between company management and representatives of the National Airline Pilots Union regarding pay levels at UTA subsidiary Aéromaritime, a charter airline serving several UTA routes. When parent company Chargeurs proposed reorganizing Aéromaritime in an effort to remain competitive in the cut-throat charter business, pilots at UTA promptly went on strike. They quite rightly feared that the reorganization would mean pay cuts. In a protracted dispute which lasted the better part of a year, negotiators on both sides accused the other of bad faith and breaking their word. The strike was finally settled in October 1989 with an agreement which was in effect a compromise. The pilots were guaranteed that no jobs would be lost before 1993, but pay cuts were indeed introduced.

The ugly strike, and the threat that it could erupt again in 1993, may have been one of the factors that contributed to Jérôme Seydouxs decision to sell off 55 percent of UTA to Air France in 1990, and a further 13.5 percent in 1991. The sale brought a considerable sum into the Chargeurs war chest, which Seydoux immediately set about spending on other ventures. Air France, for its part, mushroomed overnight into the seventh largest airline in the world behind TWA and Japan Airlines. This phenomenon had serious consequences for the future of deregulation in France, since the state carrier now had a virtual monopoly on air travel outside the country.

Meanwhile, Chargeurs was continuing to explore expansion into a number of television and movie production companies. One of the earliest ventures was in 1986, when Chargeurs obtained a 31 percent interest in France 5, owner of Frances new fifth television channel, known as La Cinq. The channel was extremely successful during its first year of operation, quickly garnering almost 20 percent market share in areas where it was available. Shareholders were therefore incensed when the government canceled France 5s concession and gave it to a new company, Société pour LExploitation de la Cinquiéme Chaine, which subsequently took over many of the shares and most of the programming and facilities of France 5. Chargeurs promptly obtained a ten percent interest in the new company, at the same time filing a lawsuit against the government for breach of contract. In 1987, Chargeurs obtained a 50 percent share in Renn Productions, which had produced such popular films as The Bear, Valmont, and Jean de Flor e tie.

In the same year, Seydoux negotiated a 10 percent interest in the new British Satellite Broadcasting (BSB) company, due to begin broadcast of three satellite television channels in the United Kingdom in 1990. The new venture appealed especially to Seydouxs vision of dynamic expansion, and he committed a sum in excess of F200 million (US$42 million) to BSB. In November 1990, BSB merged with a second satellite television station, Sky TV, creating a new company known as BSky B, which boasted two pay-TV channels, a sports channel, a general entertainment channel, and an information channel. Investors were heartened by the success of the new venture, which by mid-1991 had 1.8 million subscribers. The movie channel was particularly popular, with 800,000 British subscribers.

In August 1990 Chargeurs bought out historic Pathé Cinéma, founded in 1896 by Charles and Émile Pathé and one of the oldest film companies in Europe. With the purchase, Chargeurs acquired the rights to 245 films, including the classics Les Enfants du Paradis, and La Dolce Vita. Pathé also operated a television production division and extensive movie theater facilities. The new purchase added glamour to the existing film distribution division, which had purchased rights to a number of Hollywood blockbusters including Driving Miss Daisy and Dances with Wolves.

Diversification within the textile business was no less extraordinary. Between 1986 and 1991, Chargeurs added a number of large manufacturers and distributors to its portfolio. Acquisitions included Roudiére, a manufacturer of natural fabrics which was purchased in 1987, and the wool weaving concern Tiberghien Brothers. In addition, during the summer of 1987, Chargeurs systematically purchased stock in textile conglomerate Prouvost in an attempt to take control of that company. Members of the Prouvost and Lefebvre families were approached personally in a strategy that the French press characterized as a typical American raid. In spite of these aggressive efforts, Chargeurs failed to take control of the Prouvost management, although it did win minority voting rights in the company. As a result of the more general expansion program, however, Chargeurs met its goal of becoming the world leader in wool combing and trading. Other activities of the textile division included production of interlinings for clothing manufacturers and car fabrics for the automotive industry.

By the early 1990s, Jerome Seydoux had changed the name of the company he took over in 1981, and radically altered the nature of its business. Shipping and air transport had given way to movie production and satellite TV, while textiles provided the backbone of company activity. With a clearly defined vision and considerable resources at its disposal, Chargeurs appeared to be well positioned to continue its expansion into the next century.

Principal Subsidiaries

Chargeurs Textiles; R. Mathelin (97%); Teintures et Appréts de St.-Quentin; Lainiére de Picardie; Delcar SA; Delcar Industrie; Avelana; Roudiere SA; Brantome; Filature et Teinture de Lavelanet; Tissage Central du Sud; Tissage Central de la Martinoire; De Cathalo; Ets Paul et Jean Tiberghien; A. Fiandeira; Lepoutre; Irmen und Richter Textil AG; Société Commerciale Prouvost Lefebvre; Peignage Amédée (97%); Prouvost Lefebvre Bradford (UK); Hart Wool (Bradford) Ltd. (England); Prouvost Lefebvre Sabadell; Prouvost Lefebvre Pty (Australia); Hart Argentine; Prouvost Lefebvre Export Sydney (Australia); Riverina Wool Combing; Prouvost-Hart Australie (Australia); Prouvost Lefebvre Inc; Prouvost Lefebvre USA; Prouvost-Hart New Zealand; Otegui Hermanos (Uruguay); Lanera Santa-Maria; Lanas Trinidad; Walon; Novacel; Pathé Cinema; Colores Holding; Chargeurs Savamo; Mantica; Société Financière Chargeurs; Chargeurs Finance.

Further Reading

Jerome Seydoux aux Chargeurs Réunis, Le Monde, February 10, 1980; Quand M. Seydoux leve le voile, Le Monde, August 9-10, 1987; Faujas, Alain, La guerilla des ailes francaises, Le Monde, September 27-28, 1987; Faujas, Alain, Armistice à UTA, Le Monde, October 24, 1989; France Country Report No. 2 1992, London, The Economist Intelligence Unit, 1992.

Moya Verzhbinsky