Sybron International Corp.
Sybron International Corp.
Incorporated: 1968 as Sybron Corp.
Sales: $439.70 million
Stock Exchanges: New York
SICs: 3842 Dental Equipment & Supplies; 6719 Holding
Companies Not Elsewhere Classified
Sybron International Corp. is a leading manufacturer of products for the laboratory and professional orthodontic and dental markets in the United States and abroad. The enterprise has acted as a holding company since its inception in 1968. In 1995 Sybron was operating through four subsidiaries: Nalge Co., Erie Scientific Company, Barnstead/Thermolyne Corporation, and Sybron Dental Specialties.
Sybron’s roots can be traced back to the founding of the Nalge Co., in 1949, in Rochester, New York. Emanuel Goldberg founded the company to produce one thing: polyethylene pipette jars used in laboratories. Sales were brisk and Goldberg incorporated the venture in 1954. From pipette jars, Nalge quickly expanded to produce a wide array of plastic items for industrial and laboratory use. By the mid-1960s Nalge, which is credited with pioneering the use of plastic in laboratory and industrial applications, was producing 180 different products in nearly 700 sizes. Because of its strength in its niche, Nalge became a takeover target for larger, more diversified companies.
In 1966 Goldberg agreed to sell his enterprise to Ritter-Pfaudler Corp., of Rochester, New York—Goldberg remained president of the company and operated it relatively autonomously until 1976. In 1968 Ritter-Pfaudler merged with a company called Taylor Instrument Co. The new organization was named Sybron Corp., which was effectively a holding company for the diversified subsidiaries. Throughout the 1970s and 1980s Sybron bought and sold numerous companies that complemented varying business strategies, but Nalge remained a core subsidiary. By 1976, the year that founder Goldberg retired, Nalge boasted a work force of 250 and more than 240 products. Marshall Hyman took over as president of the Nalge subsidiary in 1976.
Besides Nalge, Sybron added a variety of businesses to its portfolio. By the mid-1980s, in fact, Sybron encompassed a diversified group of nearly 20 companies, most of which were engaged in the manufacture of various dental, laboratory, and specialty industrial products. The organization’s sales and assets had rapidly ballooned and Sybron had become a Fortune 500 company. Its financial performance, however, began to wane. In fact, by the mid-1980s Sybron had become bloated and inefficient. The headquarters staff had swollen to a beefy 240 and Sybron had committed itself to more than $315 million in long-term debt.
In 1986 Sybron was purchased, by way of a leveraged buyout (LBO), by LBO specialist Forstmann Little & Co. in New York City. In cooperation with Sybron management, Forstmann purchased the company and initiated an aggressive restructuring program. Over a period of 18 months the new owners slashed corporate headquarters staff to just 24, jettisoned 12 entire operating divisions, and cut Sybron’s debt load to just $65 million. By late 1987 Sybron had become a smaller, leaner, more profitable company specializing in the manufacture of laboratory and dental products. New management also took Sybron private again and, because of the elimination of many of its subsidiaries, quashed its Fortune 500 status.
The streamlined Sybron came under new ownership again in October of 1987. Donaldson, Lufkin & Jenrette Securities Corp., a New York Investment company, spearheaded the buyout, and was joined by Hicks & Haas, a Dallas merchant bank. In the end, about 30 percent of the company was owned by Sybron management and 56 percent was split evenly between the Donaldson and Hicks & Haas. The remainder of the company was publicly held in the form of stock, as the group had technically made Sybron a public company once again. Soon after the second LBO, the holding company moved its headquarters to Milwaukee, Wisconsin. Management further reduced headquarters staff to about 25 during the late 1980s and continued to slim the company’s remaining five subsidiaries as part of an effort to improve overall operating margins.
Sybron’s reorganization and financial turnaround during the late 1980s and through the early 1990s was largely attributable to the leadership of Kenneth F. Yontz, who eventually became chairman, chief executive, and president of Sybron. Yontz embodied the classic American success story. Raised in a blue-collar neighborhood in Sandusky, Ohio, Yontz was married at the age of 18 and had three children by the time he was 21. He started out working on a taillight assembly line at a Ford Motor Company plant in Michigan. When Ford offered to foot the bill for higher learning, Yontz jumped at the opportunity. “I didn’t want to be poor,” Yontz said in the December 12, 1988, Business Journal-Milwaukee.“I wanted a better lot in life….” Yontz drove a two-hour round trip three evenings a week to Bowling Green State University in Ohio. He got his bachelor of science degree in 1971 and later earned his masters degree in business administration at night at Eastern Michigan University.
Yontz was gradually promoted from the assembly line to a position as a finance manager. After receiving his masters degree he accepted a position in Chicago with Chemetron Corp., a manufacturer of fire suppression products and other industrial goods. Yontz moved quickly through the ranks before he was lured away in 1978 by Allen-Bradley, of Milwaukee, to serve as vice president. In 1984 Yontz was one of eight or nine managers that attempted an LBO of Allen-Bradley. The LBO attempt failed, but it succeeded in putting Yontz in touch with a Teddy Forstmann, a principal at the company that conducted the first LBO of Sybron. In 1986 Forstmann asked Yontz to head the newly acquired Sybron. Yontz left his comfortable position at Allen-Bradley and invested his entire net worth of $300,000 in Sybron to become a partner in the buyout.
When Yontz arrived at Sybron in 1986, the company was in trouble. Management ranks were bloated and the organization lacked direction. Furthermore, the former head of the company had attempted a leveraged buyout of his own that had severely damaged employee morale. To rectify the situation, Yontz lowered the boom quickly on most of the corporate staff and sent them packing. He then moved the company’s headquarters to New Jersey to get a fresh start, and dumped most of the company’s 17 operating subsidiaries. Yontz planned on leaving the company. But when the second LBO took place he agreed to stay on as president and chief executive if the new owners would allow him to move the company’s headquarters to his family’s home state of Wisconsin. Yontz and a skeletal staff of six or seven managers set up shop in Milwaukee. They later increased their group to an efficient team of about 25.
After Yontz and fellow managers pared its operations, Sybron’s five subsidiaries were generating about $275 million annually going into the late 1980s. That figure increased to roughly $300 million in 1989 and then to nearly $330 million in 1990. During the early 1990s Yontz continued to try to reduce costs and boost sales and earnings. He also worked to minimize the substantial debt load that the company had accrued as a result of the LBO. To that end, Sybron made an initial public offering of stock in 1992 that raised $109 million. The cash also went to fund the acquisitions of some small companies, several of which were located in Europe. The European acquisitions reflected Sybron’s five-year goal, started in 1991, to attain an equal amount of sales from domestic and foreign markets.
Sybron entered the 1990s with five operating subsidiaries that manufactured and marketed a number of dental and laboratory products, including microscope slides, reusable and disposable plastic labware, precision heating and stirring apparatus, and water purification systems. In several of those categories Sybron dominated the market. Still, among the most successful of Sybron’s companies going into the 1990s was Nalge, the company that had been used to start Sybron. After Sybron began its turnaround in 1986, Nalge and other Sybron subsidiaries were given much more autonomy and allowed to return to their entrepreneurial roots. With Sybron bureaucrats out of their way, Nalge managers succeeded in boosting sales and profits at the subsidiary. By the early 1990s Nalge was controlling a fat 60 percent share of the American labware market; about 90 percent of the subsidiary’s revenues came from the sale of plastic labware.
The driving force behind Nalge’s strong performance in the early 1990s was David Delia Penta, head of the division. Delia Penta had joined Castle Co. in 1970, shortly after it had become part of Sybron. He shifted to different Sybron subsidiaries for the next ten years, holding various finance jobs. In 1981 he joined Nalge as vice president and controller. In 1986, new management began promoting him through the ranks until he became president of Nalge in 1990. Under Delia Penta’s direction, Nalge aggressively pursued exports and worked to shore up the company’s product line. The division soon enjoyed gains, despite a U.S. and European recession during the early 1990s. Sales jumped from $70 million in 1989 to $82.5 million in 1991. Furthermore, in 1992 Nalge became one of just 55 companies to receive the E-Star award for excellence in exporting.
Sybron realized improvements in virtually all of its subsidiaries during the early 1990s. Overall sales increased from $330 million in 1990 (fiscal year ended September 30) to $383 million in 1992, and then to $440 million in 1994. During the same period net income rose from $3.1 million to $21.4 million, and then to $43 million in 1994. Furthermore, Sybron managed to decrease its long-term debt from $340 million in 1990 to about $224 million in 1994, partly as a result of the 1992 stock offering. Although Sybron had moved toward its goal of getting 50 percent of all sales from overseas, in 1994 it was generating only about one-third of its revenues from abroad. Its failure to increase that proportion was largely attributable, though, to surging domestic sales.
In 1995 Sybron was operating through four subsidiaries: Nalge, Erie, Barnstead/Thermolyne, and Sybron Dental Specialties. Nalge was primarily engaged in manufacturing reusable and disposable plastic labware products. Its Nalgene brand product line consisted of approximately 4,900 items ranging from beakers and flasks to cryogenic storage products. The company controlled between 60 percent and 65 percent of its market in the United States in 1995.
Erie Scientific Company was founded in 1934 and was subsequently acquired by Sybron. Headquartered in New Hampshire, Erie developed, manufactured, and marketed microscope slides and cover glass for sale in the United States and abroad in 1995. The Erie division maintained a wholly owned subsidiary in Switzerland that supplied its worldwide operations. The company was a leader in slide and cover glass technology and was developing a number of new technologies in the mid-1990s, such as disposable and electrically-charged glass products. Erie dominated about 90 percent of the market for its products in 1995.
Sybron’s Barnstead/Thermolyne subsidiary was the successor to Thermolyne Corporation, founded in 1942, and Barnstead Company, founded in 1878. In 1995 the company developed, manufactured, and marketed precision-heating stirring and temperature control apparatus, water purification systems, liquid handling equipment, and replacement parts. The goods were sold primarily to laboratories. Like Nalge and Erie, Barnstead/Thermolyne was engaged in the research and development of a number of new products in the mid-1990s. Its major product categories controlled between 35 percent and 80 percent of their respective markets in the United States.
Sybron Dental Specialties comprised two companies: Kerr Corporation and Ormco Corporation. Kerr was founded in 1891 and in 1995 was developing, manufacturing, and marketing a broad range of consumable dental products, including amalgam alloys, cavity liners, endodontic instruments, laboratory products, and industrial jewelry products. Kerr’s diverse product lines controlled between five percent and 35 percent of their markets. Ormco, founded in 1960, developed, produced, and marketed a broad line of orthodontic appliances and related products for U.S. markets. It served about 22 percent of the global market for such products in 1995.
In 1995 Sybron was enjoying steady gains in all of its subsidiaries. Profit increases were particularly healthy in Europe and Asia, and Sybron expected increases in both domestic and foreign markets through the mid-1990s. The company employed about 3,900 workers going into 1995, although that number was expected to increase following planned acquisitions during the year.
Nalge Company; Sybron Dental Specialties, Inc.; Barnstead Thermolyne Corporation; Erie Scientific Company.
“The CEOs of Wisconsin: Kenneth Yontz,” Business Journal-Milwaukee, March 27, 1993, p. C43.
Cohen, Sidney H., “Sybron Chemicals Announces Acquisition,” PR Newswire, July 26, 1994.
Dries, Michael, “Hot Shots—Wisconsin’s Best-Performing Public Companies: Sybron Corp.,” Business Journal-Milwaukee, July 31, 1993, p. C14.
Kirchen, Rich, “Original Sybron Investors Win Big in Selloff,” Business Journal-Milwaukee, September 3, 1994, p. 6.
——, “Sybron Is Healthy Despite Having Been Raised on Junk,” Business Journal-Milwaukee, March 19, 1990, p. 16.
——, “With Sales, Profit and Stock Up, Sybron I an IPO Success Story,” Business Journal-Milwaukee, November 21, 1992, p. 13.
Le Beau, Christina, “A Worldwide Competitor’s Family Touch: David Delia Penta Believes in Keeping Things Close-knit at Home and on the Job at Nalge Co.,” Rochester Business Journal, August 7, 1992, p. 10.
Olson, Jon, “Ken Yontz Came Home—With the Help of Two LBOs,” Business Journal-Milwaukee, December 12, 1988, p. 10.