Fimalac S.A.

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Fimalac S.A.

97, rue de Lille
75007 Paris
Telephone: ( + 33) 1 47 53 61 50
Fax: ( + 33) 145554596
Web site:

Public Company
1996 as Financière Marc de Lacharrière S.A.
Employees: 10,003
Sales: EUR 1.58 billion ($1.4 billion)
Stock Exchanges: Euronext Paris
NAIC: 551112 Offices of Other Holding Companies; 551114 Corporate, Subsidiary, and Regional Managing Offices

French holding company Fimalac S.A. (named for founder and financier Marc Ladreit de Lacharrière) wants to transform itself into a global business-to-business services Internet company. As such, the group has abandoned a number of its original investmentsincluding magazine publishing and real estateto refocus itself around three main axes. The first sector is credit rating services, through its Fitch IBCA holding, which accounted for 17 percent of Fimalacs revenues in 1999. In 2000, Fimalac boosted its credit rating division with the acquisitions of Duff & Phelps Crédit Rating and the BankWatch unit of Canadian publisher Thomson. The companys credit rating segment is also a driving force behind the companys growing Internet-based activity. Handtools and automotive and garage parts, tools, and equipment is the companys largest division, established through Fimalacs surpriseand hostiletakeover of Facom S.A. in 1999 and boosted by the FFr 3.6 billion acquisition of Autodistribution, a specialist provider of parts for the automotive aftermarket in that same year. The Facom component contributed 45 percent of Fimalacs 1999 revenues. Fimalacs third major area of operations revolves around its industrial holdings, which include its CLAL-MSX subsidiary and the related Engelhardt-CLAL joint venture, which produce metal alloys; LBC, the worlds number two provider of chemical storage facilities and services, with more than two million cubic meters of storage space. LBC, for Lille Bonnières Colombes, was one of the original Fimalac holdings. The companys industrial and manufacturing segment also includes Secap, a maker of postage and franking machines and other office-related equipment. Long criticized as a mishmash of unrelated activities, Fimalacs attempt to reposition itself as a business-to-business provider with an Internet focus (the group claims as much as 50 percent of its revenues will be generated through Internet sales in the year 2000) also seeks to boost the value of its stock by enabling the company to be assessed for the worth of its holdings, rather than as a holding company (the company estimated its share price to be as much as EUR 50 per share too low in 1999). Such a revaluation would at least benefit Marc Ladreit de Lacharrière, the companys founder, chairman, president, CEO, and holder of nearly 88 percent of the companys shares.

Holding Financial Clout in the 1990s

The formation of holding company Fimalac S.A., for Financière Marc de Lacharrière, in 1991 was merely a consecration of nearly 20 years of financial investments for its founder Marc Ladreit de Lacharrière. A member of Frances former nobility (who, although stripped of their aristocratic status after the French revolution nonetheless remained influential in the countrys political and financial circles), de Lacharrière was something of a maverick in his youthafter founding, then selling the highly successful teenage fashion magazine Made-moiselle, de Lacharrière joined the Ecole Nationale dAdministration (ENA), the breeding ground of Frances political (and financial) elite. Yet de Lacharrière soon surprised his peers, who included future political leaders and economic kingpins, such as Louis Schweitzer, later named as head of the government-owned automaker, Renault, by refusing to join the French civil service directly upon his graduationsomething unheard of among EN A graduates.

Instead, de Lacharrière rejoined the commercial world, first joining the banking industry, with the Banque de Suez (later the Banque Indosuez). In 1976, de Lacharrière left the Banque de Suez to become financial director of French cosmetics power-house LOréal. De Lacharrière went on to a brilliant career at LOréal, rising to the number two position in less than ten years, when he was named vice-president in 1984.

Yet Lacharrière already had begun leading a double life before joining LOréalthat of financier. One of de Lacharrières first investments was that of publisher Editions Masson, which de Lacharrière bought in 1973. Publishing was to continue to be one of de Lacharrières main hobby interests, as his holdings grew to include publishing group Valmonde and such diverse titles as the weekly Le Journal des Finances, Valeurs Actuelles, and the high-brow intellectual magazine Revue des Deux Mondes, originally launched in 1829.

De Lacharrières investment interests continued throughout his career at LOréal at the same time that he was helping that company capture one of the world-leading positions in the cosmetics industry (and generating a personal fortune as reward for his part in LOréals success). However, de Lacharrières personal fortunes were aided by his outside investment interests as well. During the 1980s, a number of de Lacharrières investments hit the jackpot, as it were, as he received the benefits of such events as the hostile takeover of insurance group Victoire by the Banque Suez. While his interests in Centenaire Blanzy fused into Fimalac in the late 1990salso were generating strong dividends, de Lacharrière built up a strong real estate portfolio that was to provide the basis for his groups Sefimeg subsidiary. At the same time, de Lacharrière also served as an administrator for acquisition-hungry Crédit Lyonnaise, a position he was to hold until 1993.

Financier to Internet Industrialist for the 21st Century

At the beginning of the 1990s, de Lacharrière once again surprised his peers when he resigned from LOréal at the age of 50 to devote his attentions to his growing financial holdings. One of de Lacharrières first moves as a newly free-lance financier was the takeover of Lille Bonnières et Colombes (LBC), one of Frances leading chemical storage services providers. The LBC takeover also gave de Lacharrière a publicly quoted company to run.

During the first half of the 1990s, de Lacharrière continued to build up his interests, grouping his various holdings under a number of publicly listed holding companies, including LBC, Alspi, Comptoir Lyon Alemand Louyot, Centenaire Blanzy (in which de Lacharrière built up controlling interest in the late 1990s), and Clal, the specialty metals and alloys producer.

In 1992, de Lacharrière decided to launch his growing portfolio into a new direction, and he acquired controlling stakes in Frances Sofres, a public research company, and followed that acquisition with the takeover of Secodip, making Sofres the leading market research company in France. After Sofres was acquired by Taylor Nelson AGB (creating Taylor Nelson Sofres Pic), de Laccharieres share of the new company, one of the world leaders, remained at 11 percent.

Meanwhile, de Lacchariere had brought his interest to bear in another new area, when his holding company acquired International Banking and Crédit Analysis (IBCA), a London-based bond ratings firm with a specialty in the banking sector, in 1993. IBCA, founded in 1978 by Robin Monro Davis, who continued to lead the company after its acquisition, was the only non-American ratings firm admitted as a Nationally Recognized Statistical Rating Organization (NRSRO) by the Securities and Exchange Commission. With the Sofres and IBCA acquisitions, de Lacharrière had correctly recognized the growing trend toward such information services, a market that was to see a full boom by the mid-1990s. Under de Lacharrières control, both IBCA and Sofres grew to become leaders in their sectors, expanding their range of services as well as building their position through acquisitions. Following the acquisitions of these interests, de Lacharrière sold off his stake in Editions Masson.

Often described as a mishmash of bric-a-brac, de Lacharrières varied holdingsbased on a cascade model of publicly quoted holding companies that had been popular among French financiers in the 1980shad grown to more than FFr 8 billion in revenues. In the mid-1990s, however, de Lacharrière joined a growing trend toward unified holdings. The first stage of the creation of a new, simplified investment structure was taken in 1996, when the Lille Bonnières et Colombes holding absorbed the Alspi and Clal vehicles to create the single Fimalac S.A. (which stood for Financière Marc de Lacharrière) holding company. The simplification of de Lacharrières holding companys and Fimalacs structure continued into 1998, when Centenaire Blanzy (by then de Lacharrière had built up more than 85 percent of that groups voting rights) was merged into Fimalac. These dealings led to complaints from the various minority shareholders in de Lacharrières holdings; de Lacharrière was criticized for juggling with his companies and employees without consulting his minority shareholders.

Key Dates:

Marc Ladreit de Lacchariere acquires publicly listed Lille Bonnières et Colombes (LBC).
Company acquires Sofres.
Acquires IBCA; Sofres acquires Secodip.
LBC acquires two other publicly quoted de Lacchariere holding companies, renames as Fimalac S.A.; IBCA acquires Quest insurance ratings provider.
Fimalac defines new business to business strategy, divests its publishing and real estate holdings, agrees to merge Sofres into Taylor Nelson AGB; IBCA acquires Fitchs Investors Services, renaming it Fitch IBCA.
Fimalac takes over Facom S.A.; Fitch IBCA acquires Duff & Phelps and BankWatch.
Fimalac announces intention to boost its Internet-based business.

The lack of transparency among de Lacharrières holdings and the lack of focus among Fimalacs business areas mean-while continued to depress the groups stock price, as the Paris stock market remained wary of diversified holding companies. In part in response to this situation, de Lacharrière and Fimalac devised a new strategy designed to clarify the holding companys direction. Beginning in 1997, the company identified its future focus as that of a business-to-business company. As such Fimalac began divesting itself of various interests, including its Sefimeg real estate group, sold to fellow financier Francois Pinault, followed by the sales of its Valmonde publishing holdings, and then its interests in the market research sector, through its shares of Sofres.

The redirection of the company continued through 1998, as Fimalac pared down to a new core of holdings, including its Clal precious metals and alloys transformation unit, which produced specialty metals for applications ranging from dentistry to jewelry (and which accounted for some 65 percent of revenues in 1998), the Secap-Anfa business machines group, and Fimalacs LBC chemical storage arm. If Fimalac maintained a strong industrial component to its holdings, its attention also had been drawn to the rapidly growing information age. In 1996, Fimalacs IBCA ratings company moved into the largely protectedbecause of the heavy cost of start-up investments American market with the acquisition of American insurance rating company Quest. Then the company moved to claim a place among the top three ratings companies worldwide, behind Moodys and Standard and Poor, when it acquired the United States Fitch Investors Services, for US$175 million.

The renamed ratings company, Fitch IBCA, continued to drive Fimalacs growth into 1999, when the company added two more North American companies, bond rater Duff & Phelps, and then bank ratings company BankWatch, formerly part of Canadas Thomson publishing group. Yet in mid-1999, de Lacchariere added a new dimension to the company when it launched a hostile takeover for Frances hand tool and automotive aftermarket leader Facom S.A. An unusual move for de Lacchariere, the Facom takeover proceeded on a more or less friendly basis after Fimalac raised its purchase offer. De Lacchariere then put friend Alain Gomez, former head of French electronics giant Thomson S.A. in place as CEO of Facom.

By 2000, de Lacchariere and Fimalac, in a continuing quest to boost the companys stock market valuation, were proclaiming their conversion to the religion of the new Internet economy; by the end of the year 2000, the company expected some 50 percent of its sales to come through the Internet, driven not only by the strong on-line services offerings of its Fitch IBCA subsidiary but also by Facoms strong internet presence. But Fimalac promised to go further, as de Lacchariere announced his companys readiness to invest whatever funds necessary to build its share of revenues provided through the Internet, including an interest in acquiring businesses directly involved in the booming e-business sector in the early years of the new century.

Principal Subsidiaries

CLAL-MSX S.A.; CLAL US Eurl; Engelhard-CLAL SAS (50%); Facom S.A. (93.75%); Financière SECAP S.A.; LBC S.A.; Minerals & Engrais S.A.; Rhenameca S.A.; SEFI SNC; Fimalac Inc. (U.S.A.); Fitch IBCA Inc.

Principal Competitors

Cookson Group plc; Dun & Bradstreet Corp.; Emerson Electric Co.; GATX Corp; Inco Limited; Invensys PLC; Johnson Matthey PLC; Metals USA Inc.; Moodys Corp; Neopost S.A.; Rio Algom Ltd; Robert Bosch GmbH; Ryerson Tull Inc; SaintGobain S.A.; Snap-On Inc.

Further Reading

Gay, Pierre-Angel, Fimalac cherche à convaincre la Bourse de son ancrage dans la nouvelle économic, Les Echos, April 27, 2000, p. 28.

Jacquin, Jean-Baptiste, Fimalac To Acquire BankWatch Unit from the Thomson Corporation, Canadian Corporate News, October 19, 2000.

, Les ennuis de Marc Ladreit de Lacharrière, LExpansion, May 15, 1996, p. 12.

, Moi, un raider ? Surtout ne le dites à personne, LExpansion, May 27, 1999, p. 88.

, Opération nettoyage dans les holdings, LExpansion, June 27, 1996, p. 24.

, The Would-Be King of Crédit Ratings, Economist, August 16, 1997.

Marcial, Gene G., A Buy Rating on This Bond-Rater?, Business Week, March 29, 1999, p. 180.

M.L. Cohen