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SHV Holdings N.V.

SHV Holdings N.V.

Rijnkade 1
3511 LC Utrecht
The Netherlands
Telephone: (+31) 30-233-8833
Fax: (+31) 30-233-8304
Web site: http://www.shv.nl

Private Company
Incorporated:
1896 as Steenkolen Handels-Vereeniging
Employees: 30,900
Sales: EUR 9.4 billion ($9 billion)(2002)
NAIC: 551112 Offices of Other Holding Companies

SHV Holdings N.V. is one of the Netherlands largest private companies. The family-owned concern serves a holding company for its interests in liquid petroleum gas, wholesale foods and consumer goods, private equity, recycling materials and products, and oil and gas exploration. Paris-based SHV Gas overseas the companys LPG interests, with operations in 23 countries, under the Primagaz, Calor, and other names. Makro represents the groups interests in the wholesale cash-and-carry market, focused on the Southeast Asian and South American markets (the company sold its European chain to Germanys Metro in the 1990s). NPM Capital is SHVs equity investment arm, with a focus on European venture capital investments. The company also owns one of the worlds largest recycling businesses, through U.S.-based David J. Joseph Company and TSR, in Germany, formerly part of the Thyssen group. Lastly, SHV has been involved in the oil and gas exploration business off the Netherlands coastline through Dyas, a non-operator that provides investment and partnership to other companies. SHV Holdings is owned by the Fentener van Vlissingen family, which remains committed to the companys privately owned status. The companys exposure to slumping South American currencies caused its sales to drop to EUR 9.4 billion in 2002 (from 10.4 billion in 2001).

Coal Cartel at the Turn of the Century

The Fentener van Vlissingen family was already one of the Netherlands most prominent coal trading families when, together with eight other Dutch trading families, it formed the Steenkolen Handels-Vereeniging (Coal Trading Association) in Utrecht in 1896. A number of the original partners in SHV had been active in the coal trade since the 18th century. In addition to the formation of SHV, the families formed bonds through a number of marriagesthis was the case, for example, between the Fentener van Vlissingen and van Beuningen families, which gained control of the SHV by the beginning of World War II.

In 1904, SHV acquired the exclusive trading rights for the coal produced by the Rheinisch-Westfälisches Kohlen Syndikat, which controlled the important Ruhr region coal production. Two years later, the SHV gained the exclusive rights to coal transports along the Netherlands inland waterways, including the Rhine river, setting up the first of its subsidiary businesses to conduct those operations. SHV inland waterways fleet, later regrouped under the name Nederlandsche Rijnvaart Vereniging, grew into the worlds largest by the 1950s.

Much of the growth of SHV came under the leadership of Frederik Frits Fentener van Vlissingen II, who joined the company in 1904 at the age of 22, taking over from his ailing father. By 1911, the younger Fentener van Vlissingen had been named the companys director. In that same year, Fentener van Vlissingen led the company in a new direction, setting up the Hollandsche Kunstzijde Industrie, a producer of synthetic fabrics, in part because the heavy coal consumption needed by that industry made the new company an important customer for SHVs coal interests. Financial backing for the Hollandsche Kunstzijde came from the German company Vereignigte Glanzstoff, which itself was owned by a member of the SHV partnership.

Under Fenterner van Vlissingenlater called one of the fathers of the Dutch economySHV established its own investment capital company, called Unitas, which provided funding for the creation of new companies. As such, SHV became the motor behind the establishment of such major Dutch companies as KLM, Hoogovens, Akzo, and the Nederlandsche Vliegtuigenfabriek, as well as Germanys Vereinigte Stahlwerke.

SHV grew strongly, adding offices in Rotterdam and Amsterdam; in 1913, the company transferred its headquarters to a new office in Utrecht, which was to remain the companys home into the 21st century. The Netherlands neutral status during World War I enabled it to continue trading, particularly given its close ties with Germanys coal and other industries. In 1917, SHV, through Unitas, itself moved into mining in Germany, setting up Nemos (Netherlandsche Maatschappij tot Ontginning van de Steenkolenvelden) to operate the Sophia Jacoba anthracite mine. That operation led SHV, which had functioned primarily as an importer, to begin exporting coal as well. From its start in 1924, SHVs coal export operation grew to become one of the worlds leaders in that market.

The rising importance of oil did not go unnoticed by SHV, however. By the late 1930s, the company had begun trading in that area as well, setting up a fuel facility; the company also took a majority share of the VEM (Verenigde Exploitatiemij) shipping companya merger of three fishing companiesthe trawler fleet of which became an early customer for SHVs oil. Nonetheless, SHV remained reliant on its coal interests into the 1950s, when the rising dominance of petroleum forced it to look elsewhere for its future growth. By then, the Fentener van Vlissingen family had bought out the share in SHV held by the van Beuningen family, becoming the companys sole owner.

Transforming in the 1970s

In adapting to the new market conditions, SHV showed a flexibility that was to become a company hallmark. By the end of the 1950s, SHV had embraced the oil industry, acquiring oil interests in Austria and Italy while building up an important oil bunker business. The company adopted a new trade name for its oil activities, PAM, under which SHV began selling petroleum products. SHV also built up a network of gasoline stations, which extended from the Netherlands into Germany and Austria, under the PAM name. In addition, under a joint venture, Calpam, SHV began providing heating oil for the home and industrial markets in Belgium, Demark, and Luxembourg.

SHVs fuel interests soon turned toward a new type, however. A large natural gas deposit had been discovered in the Netherlands northern Groningen region at the end of the 1950s. In 1963, SHV set up a new subsidiary, Dyastaken from the name given to the rock layer beneath which natural gas deposits were often foundto begin exploration activities. Dyas preferred the role of non-operator, providing financial and other support services to its operator partners. One of the first of these was formed with Amoco and Gelsenkirchen (later Veba), which discovered its first gas deposit in the so-called Bergen Concession, near Amsterdam, in 1964.

That same year, Paul Fentener van Vlissingen joined the company, by then led by brother Frits Fentener van Vlissingen III. The younger Fentener van Vlissingen quickly showed himself an energetic leader and was largely credited with transforming the company after the collapse of the coal industry by leading it on a diversification drive.

This process began in earnest at the end of the 1960s. Electronics became an important new area of interest for SHV with the acquisition of Geveke & Groenpol NV in 1970. SHV split up Geveke & Groenpol into two operations. The first part took over the Geveke & Groenpol installation business, which was placed, alongside other acquisitions, including into a new subsidiary, Group Technical Installation, or GTI. Meanwhile, Geveke & Groenpols sales and distribution operation were reformed under the name Groenpol Industríele Verkoop, which later became the basis of Geveke Electronics (later known as Getronics).

SHVs foray into electronics lasted only until the early 1980s, when it spun off GTI and Geveke in management buyouts by 1983. Instead, SHV had begun building a number of other growing operations. The first of these was the Makro wholesale cash-and-carry chain, which the company had launched, in partnership with Germanys Metro supermarket group, in 1968. Makro was inspired by the American example of self-service warehouse stores and opened its first branch in Amsterdam.

The concept caught on quickly, and Makro began expanding throughout the Netherlands, then throughout Europe, in conjunction with partner Metro. Makro also entered the South American market in the early 1970s. By the 1980s, Makro had entered the United States as well, although in 1988 SHV sold 51 percent of Makro Inc. to the Kmart Corporation. The success of the Makro concept encouraged SHV to try its hand at other retailing concepts, acquiring, in 1970, the Otto Reichelt chainwhich was to form the companys largest retail operation into the mid-1990sas well as the Netherlands formats Kijkshop and Xenos.

Company Perspectives:

SHV is a privately held company and wishes to remain so. SHV is a decentralised company. Great trust is placed in our people in the field. This decentralisation provides an excellent opportunity for individual development. Mutual respect and trust provide the basis for happiness at work. SHVs most important values are integrity and loyalty. Integrity means being honest, genuine, and totally open in communications about all matters that concern the company. Good news may travel slowly, bad news should travel quickly. Loyalty means putting your best effort into your work for the company and its development. Based on the integrity and loyalty of our people, SHV wishes to continue to grow both for the benefit of our shareholders, our employees, and for the well-being of the society in which we live and work.

Another diversification area was recycling, which the company entered with the 1975 purchase of the David J. Joseph Company, which had stemmed from a company founded in Ohio in 1863 and which had grown into the largest scrap metal and recycling firm in the United States. At the same time, SHV began building a dry bulk transport and logistics wing, holding interests in such companies as Europees Massagoed Overslagbedrijf, EKOM, and Goudriaan & Co.

Re-focusing for the New Century

By the end of the 1980s, SHV had found a new interest. In 1982, the company acquired a major share in Frances Primagaz, which had been founded as Société Liotard Frères in 1857. In 1928, that company had the idea of bottling butanewhich was a byproduct of the petroleum distillation processand selling it to households and industries. By 1934, the company had adopted the brand name Primagaz, which became the companys name itself in 1938.

Primagaz had added propane in 1951, and then began an international expansion, spreading throughout most of Europe. The company also developed Liquid Petroleum Gas as a automotive fuel by the end of the 1970s, a market which began in earnest in the mid-1980s.

SHV continued to build up its stake in Primagaz. At the same time, it sought other acquisition targets. A major addition came in the mid-1980s when SHV began building a stake in the United Kingdoms Calor Gas. Formed in 1935, that company spread throughout the United Kingdom by the outbreak World War II. Calor grew strongly in the years following the war, becoming the countrys leading bottled gas provider; it met with more limited success in its own vehicle LPG operations.

SHV initially acquired a nearly 30 percent share in Calor Gas, becoming that companys largest shareholder. In 1987, the company attempted to force a merger between Calor Gas and Burmah Oil, a British oil company. That bid was rejected by Calor Gas, however. Instead, SHV continued to build up its position in Calor Gas, reaching 40 percent by 1988. SHV unsuccessfully tried to marry Burmah and Calor again at the end of the decade and finally gave up on this scheme in 1991.

Instead, SHV used its positions within Primagaz and Calor to take the two companies on an expansion drive into Eastern Europe, setting up partnerships in Poland and Slovakia in 1991 and in Hungary in 1992. SHV also entered the South American market, buying up Brazils Supergasbras in 1995. Meanwhile, SHV continued to build its interest in Calor, gaining majority control; in 1996, SHV launched an offer to take over full control of Calor Gas. That deal was completed in 1997. Two years later, SHV acquired full control of Primagaz as well.

Makro too had continued to expand, opening its first branches in Southeast Asia in Thailand in 1989, followed by Indonesia in 1992, Malaysia in 1993, and China and the Philippines in 1996. Makro had also significantly expanded its presence in the Brazilian market, with 20 stores by 1990 and 40 stores by the beginning of the next decade.

Yet, faced with bruising competition in Europe, and hampered in its ability to compete by its private status, SHV decided to exit the cash-and-carry market in 1997, selling off its entire Makro Europe operationby then posting sales of some $8 billion per yearto Germanys Metro. SHV kept its South American and Asian Makro operations. At the same time, the company, which had in the meantime built up a variety of other retailing interests, ranging from office supplies in Beligum to wholesale goods in South Africa, began divesting these operations as well.

Flush with cash from the Makro sale, SHV began eyeing new acquisition candidates. In 1998, the company purchased a 60 percent stake in the scrap metal operations of Germanys Thyssen group, which were renamed TSR. The following year, SHV took full control of TSR.

In 2000, SHV turned to another direction, buying up NPM Venture Capital Group, paying nearly EUR 2 billion for one of the largest venture capital companies in the Netherlands, a move made in part to allow SHV to enter the Internet and e-commerce markets. By 2001, SHV had rebuilt its annual revenues past EUR 10 billion. In that year, the company, which still maintained interests in coal trading, sold off the last of those operations. By the end of 2002, however, the companys exposure to fluctuations in South American currencies pushed its annual sales back to EUR 9.4 million. Nonetheless, SHV remained one of the Netherlands largestand most flexibleholding companies.

Key Dates:

1896:
Eight Dutch coal-trading families join together to form Steenkolen Handels-Vereeniging (SHV).
1906:
SHV gains an exclusive concession to imports of coal produced by the Rheinisch-Westfälisches Kohlen Syndikat.
1924:
SHV begins coal exports, becoming one of the worlds leaders in coal shipments.
1950s:
The company sets up PAM oil company as the coal market shrinks.
1963:
Dyas natural gas exploration company is established.
1968:
Makro cash-and-carry chain is launched in partnership with Metro of Germany.
1970:
Geveke & Groenpol electronics installation and distribution business is acquired.
1975:
David J. Joseph Company of the United States, a scrap metal and recycling firm, is acquired.
1982:
The company acquires stake in Primagaz of France.
1983:
Geveke operations are spun off in management buyouts.
1987:
The company begins acquiring a stake in Calor Gas of the United Kingdom.
1989:
Makro enters Southeast Asia with its first stores in Thailand.
1996:
SHV acquires full control of Calor Gas.
1997:
SHV sells Makro Europe to Metro.
1998:
The company acquires 60 percent of Thyssens scrap metal operations, TSR.
1999:
SHV acquires full control of Primagaz and TSR.
2000:
SHV acquires NPM Venture Capital, a leading Netherlands venture capital group.
2001:
SHV sells off its last remaining coal trading operations.
2003:
The companys sales drop EUR 9.4 billion for 2002.

Principal Subsidiaries

Bizimgaz Ticaret Ve Sanayi A.S. (Turkey); Butan Plin d.d. (Slovenia); Calor Gas Ltd. (United Kingdom); Calor Gas Northern Ireland Ltd (Northern Ireland); Calor Teoranta (United Kingdom); Compagnie des Gaz de Pétrole Primagaz S.A.; ??? Makro Commercial Co., Ltd. (China); Dyas B.V.; Gaspol S.A. (Poland); Guangzhou Chia Tai Makro (JiaJing) Co. Ltd. (China); HKS Metals B.V. (Netherlands); Ipragaz A.S. (Turkey); Joseph Transportation Inc. (United States); Liquigas S.p.A. (Italy); Liquigaz Philippines Corporation (Philippines); Makro Asia Thailand ; Makro Atacadista S.A. (Brazil); Makro Cash & Carry Distribution (M) Sdn. Bhd. (Malaysia); Makro Comercializadora S.A. (Venezuela); Makro de Colombia S.A. (Colombia); Makro Office Centre Limited (Thailand); Makro Taiwan Ltd.; Minasgás S.A. Distribuidora de Gás Combustível (Brazil); Orkam Asia Holding AG (Switzerland); Orkam South America Holding AG (Switzerland); Pilipinas Makro, Inc. (Philippines); Primagas GmbH (Germany); Primagaz Belgium N.V.; Primagaz Central Europe GmbH (Austria); Primagaz Danmark A/S; Primagaz Distribución S.A. (Spain); Primagaz GmbH (Austria); Primagaz Hungária Rt. (Hungary); Primagaz Nederland B.V.; Primaplyn Spol. s.r.o. (Czech Republic); Probugas a.s. (Slovakia); PT Makro Indonesia (Indonesia); SHV Energy India Ltd (India); SHV Energy Pakistan (Pvt) Ltd. (Pakistan); SHV Gas China (P.R. China); Siam Makro Public Company Limited (Thailand); Supergasbras Distribuidora de

Gás S.A. (Brazil); Supermercados Mayoristas Makro S.A. (Argentina); The David J. Joseph Company (United States); Tissir Primagaz (Morocco); TSR Recycling GmbH & Co KG (Germany); World Gas (Thailand) Company Limited (Thailand).

Principal Competitors

Carrefour SA; Wal-Mart Stores, Inc.; TOTAL S.A.; CFF Recycling; Royal Dutch/Shell Group of Companies.

Further Reading

Brinks, Mirjam, SHV hard op zoek naar uitbreidingsmogelijkheden, De Telegraaf, May 11, 2000.

Cramb, Gordon, SHV to Diversify by Buying NPM Venture Capital Group, Financial Times, July 17, 2000, p. 24.

Harverson, Patrick, SHV in Offer to Buy Rest of Calor, Financial Times, October 8, 1996, p. 21.

Smit, Barbara, How to Put Passion into a Dutch Donkey, European, March 21, 1996, p. 25.

, Unravelling a Family Empire, Financial Times, July 21, 1997, p. 22.

M. L. Cohen

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