Tessenderlo Group

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Tessenderlo Group

rue du Trone 130
Telephone: +32 02 639 18 11
Fax: +32 02 639 19 99
Web site: http://www.tessenderlogroup.com

Public Company
1919 as Produits Chimiques de Tessenderlo
Employees: 8,181
Sales: EUR 2.08 billion ($2.63 billion) (2004)
Stock Exchanges: Brussels
Ticker Symbol: TESBr
NAIC: 325188 All Other Inorganic Chemical Manufacturing; 325131 Inorganic Dye and Pigment Manufacturing; 325181 Alkalies and Chlorine Manufacturing; 325211 Plastics Material and Resin Manufacturing; 325312 Phosphatic Fertilizer Manufacturing

Tessenderlo Group is a Belgium-based, globally active specialty chemicals company. One of Belgium's largest chemicals firms, Tessenderlo has established a position for itself on an international level by focus on a narrow range of core niche chemicals. The company is the world's top producer of hydrochloric acid, fertilizers based on liquid sulfur, sodium hydrosulfide, benzyl alcohol, acetate, and chloride, among others. Tessenderlo holds number two positions in the production of animal feed-grade phosphates and potassium sulphate and the number three position worldwide in the production of gelatin. While targeting a global market, backed by a network of 66 factories and 40 sales offices, Tessenderlo is a highly European group. In Europe, the company is the largest producer of glycine, and number two in caustic potash; the company also holds leading positions in the production of plastic compounds and polyvinyl chloride (PVC). Europe accounts for 84 percent of the company's total sales, including 39 percent from Belgium and 23 percent from France. The United States adds 10 percent of the group's sales, while the rest of the world, including operations in China, Chile, and Brazil, among others, adds 6 percent to sales. The company posted revenues of EUR 2.08 billion ($2.6 billion) in 2004. Since 2005, Tessenderlo has been structured in three primary divisions: Chemicals; Specialties, including fine chemicals, gelatin, and natural derivatives; and Plastics Converting, including the production of PVC-based profiles, pipes and fittings, and compounds. Tessenderlo is listed on the Euronext Brussels Stock Exchange and is led by Chairman and CEO Gérard Marchand.

19th-Century Origins

The first association of the town of Tessenderlo, in Belgium, with the country's developing industry occurred in the late 19th century with the founding of Exploitation des Procédés Raynaud in 1892. That company began manufacturing chloric acid and sodium sulfate, used in various industries and products such as detergents. Following World War I, the site was acquired by L'Union Française des Produits Chimiques & Matières Colorantes, which despite its name was owned by Belgian interests. The formation of this company marked the start of the later Tessenderlo Group. The site was redeveloped and in 1920 launched the production of the sulfate-based fertilizer potash and hydrochloric acid, a byproduct of the sulfate production process. In that year, the company was renamed Produits Chimiques de Tessenderlo.

In the 1920s, Tessenderlo's production featured a number of company mainstays, including feed phosphates, fertilizers, and sulfates. These products remained central to the company's operations throughout the century and into the beginning of the 21st century. The decade also marked the beginning of Tessenderlo's relationship with France, which became the company's second largest market after Belgium. In 1923, Tessenderlo formed a sales agreement with France's Société Commerciale des Potasses d'Alsace. That agreement led to the creation of a joint venture between the two companies, called Produits Chimiques de Limbourg, formed in 1929. The creation of the joint venture, which involved the merger of the Tessenderlo and Alsace companies' operations, also marked the entry of French investment into the Belgian company. The Limbourg-based joint venture built a new plant in the town of Ham and began producing potassium sulphate and dicalcium phosphate. Exports formed a major part of the joint venture's operations, and by 1930 exports accounted for some 80 percent of the company's total production.

Yet the deepening of the economic crisis in the 1930s forced Produits Chimiques de Tessenderlo to withdraw from the joint venture with Potasses d'Alsace in 1936. Instead, Tessenderlo set up its own independent operation, focused on the main Tessenderlo site, for the production of new salt and potash derivatives, including sulfuric acid, dicalcium phosphate, chlorine, and caustic soda. The company went public the following year, listing on the Brussels Stock Exchange.

The years of World War II and the Nazi occupation of Belgium culminated in an explosion at the main site, which killed nearly 200 and left 800 wounded in 1942. Following the war, the company rebuilt its operations. In 1954, however, the Tessenderlo company's development once again coincided with that of Potasses d'Alsace, now known as Mines de Potasses d'Alsace. This time, the French company acquired its Belgian counterpart outright. Under its new owners, later to be known as Entreprise Minière & Chimique, the Tessenderlo site remained focused on its sulfate-based production, and its core Limbourg region, into the 1960s.

Diversifying from the 1960s

Tessenderlo launched its first effort at diversification, accompanied by its first expansion beyond the Limbourg region, in 1964 when it acquired a company in Vilvoorde-based Pont Brûlé. That company, which like Tessenderlo produced sodium sulphate and dicalcium phosphate, added the production of gelatin to Tessenderlo's sphere of operations as well. Gelatin, derived from slaughterhouse byproducts, was produced by hydrolyzing the bones and skins of pigs and cattle, a process that made use of hydrochloric acid. As Tessenderlo had already emerged as a major producer of hydrochloric acid, the extension proved a natural fit. Gelatin and, later, other specialty products such as natural derivatives were used in flavorings.

Tessenderlo's production of chlorine provided the launch pad for its next extension at the end of the 1960s. In 1969, the company teamed up with DSM to begin production of vinyl chloride monomer and, later, polyvinyl chloride (PVC). For this effort, the companies created a joint venture, Limburgse Vinyl Maatschappij, and built a new production facility, which came onstream in 1972. The company also changed its name that year, becoming Tessenderlo Chemie.

Tessenderlo's growing gelatin operation formed the basis for the creation of another subsidiary, PB Gelatins. Formed in 1972, PB Gelatins began to expand through acquisitions, starting with the purchase of Colles et Gelatines, based in Zaventem, in 1973. In 1975, the gelatin production subsidiary added a site in Germany, acquiring Nienburger Gelatine.

Tessenderlo extended its operations again with the launch of a fine chemicals division, which began producing benzyl chloride, another chlorine derivative, as part of a joint venture, in 1976. That business was expanded in 1980 with the purchase of 100 percent control of Benzyl Chemie. The company also boosted its vinyl chloride operations as well, buying up France's Société Artésienne de Vinyl in 1976. Meanwhile, the company had added another company, Limburgse Rubber Producten, in 1975, and then launched construction of a new electrolysis facility.

By the early 1980s, Tessenderlo had completed, in large part, its diversification efforts. In 1983, the company restructured its operations, bringing all of its subsidiaries under a single holding company, named Tessenderlo Chemie N.V. The newly reorganized company now boasted four main areas of operations: Inorganic and Chlor-alkali Chemicals; Fine Chemicals; Gelatin; and Natural Derivatives. By focusing on niche products, the company successfully avoided direct competition with the world's chemical industry giants. Over the next 20 years, Tessenderlo established itself as a European and/or global leader in many of its product groups.

Tessenderlo's vinyl chloride monomer and PVC production led it to an interest in developing downstream activities as well. In 1984, the company launched a strategy to add a new business division, that of Plastic Conversion. As part of this effort, the group launched a new series of acquisitions, starting with French plastic pipe manufacturer Sotra in 1984. The following year, the company began producing window profiles through the purchase of Plastival, located in Clerval, France. By the end of the decade, the company had added Dyka, a pipes and fittings maker active in The Netherlands and Belgium, acquired in 1987. Into the 1990s, the group boosted its plastic products operations with the purchase of Deltaplast, in The Netherlands, in 1993, and Seperef, a pipes producer in Quincieux, France, in 1996.

Niche Leader in the New Century

Tessenderlo continued building up its other core business areas through the 1990s as well. The group's Gelatin operation grew with the acquisition of a production facility in Treforest, marking the company's entrance into the United Kingdom, in 1985. In a related move, the company acquired Caillaud, based in France, which specialized in collecting and processing slaughterhouse byproducts, and provided a stable supply of raw materials for the group's gelatin production. A decade later, the company's gelatin subsidiary made a major step toward becoming the world's leading gelatin producer through its acquisition of Baert-Verlee, based in Belgium, which also produced animal meal and fats.

Company Perspectives:

Tessenderlo Group has chosen to focus on those manufacturing sectors in which it can be a world leader. 60% of Tessenderlo Groups products are specialty products that can be found in practically all aspects of daily life, from food to construction, from medications through to computer products. It is this diversity and interrelation between product lines that limits the impact of fluctuating market conditions.

Tessenderlo expanded its basic production operations with the acquisition of a chlorine, alkali, and mineral chloride production facility from Produits Chimiques de Loos in 1988. The following year, the company acquired full control of the Lim-burgse Vinyl Maatschappij joint venture. Tessenderlo also extended its downstream operations, buying up Tiffauges, France-based Thermoplastiques Cousin Tessier in 1991. The purchased marked Tessenderlo's entry into the production of PVC compounds and thermoplastic elastomers. In 1995, the company bought the Wymar group of companies, active in France and Belgium, but also in Canada, marking the group's expansion into the North American market. Wymar was a major producer of PVC-based window profiles.

Until then, Tessenderlo's operations had focused on its European base. In the late 1990s, however, the group began its expansion into the Americas. A major part of this effort was accomplished with the purchase of Hickson Kerley, the U.S. arm of Hickson International. Completed in 1996, the acquisition gave Tessenderlo control of a major producer of specialty chemicals, including sulfur-based agricultural and industrial products in the U.S. market. The Kerley acquisition also gave the company its first foothold in the Latin American markets.

The move into the United States came as part of Tessenderlo's effort to develop itself as an internationally operating company. Tessenderlo continued to add operations in the United States, such as Chelsea Building Products in Pennsylvania, acquired in 1996. In Italy, the company purchased a chemicals plant in Pieve Vergonte in 1997. The company entered Eastern Europe in 1999, buying a PVC compound production facility in Warzaw, Poland. The group also had entered China, creating the joint venture Lianyungang Chemical Factory in 1995, in order to produce benzyl chloride and other chemicals.

Tessenderlo's expansion continued into the 2000s, notably with the purchase of Accordis Fine Chemicals, based in Leeds, England, and a chloroluene operation from Atofina in Widnes, also in the United Kingdom, both in 2001. In 2003, the company expanded its gelatin business, adding a site in Davenport, Iowa, and in Santa Fe, Argentina, marking the first international expansion of that division. Both operations were purchased from Australia's Goodman-Fielder. In 2004, the company added to its extensive French presence, where 25 of the group's 65 production facilities were located, with the purchase of Acome, a PVC profiles producer.

The growth of all of its core operational divisions led Tessenderlo to undertake a new restructuring in 2005. As part of that process, the company created three core business groups: Chemicals, including inorganics, chlor-alkalis, and PVC; Specialties, including gelatin, natural derivatives, and fine chemicals; and Plastics Converting, including profiles, pipes and fittings, and compounds. Already a world leader in most of its product categories, Tessenderlo was prepared to continue its expansion on a global scale into the late 2000s.

Principal Subsidiaries

Aliphos S.A.S. (France); Baert-Verlee & Zoon BVBA; Ets. Caillaud S.A.S. (France); Calaire Chimie S.A.S. (France); Ets. Charvet Père et Fils S.A.S. (France); Chelsea Building Products Inc. (United States); Chemilyl S.A.S. (France); Cofipar S.A. (Netherlands); Dyka B.V. (Netherlands); Dyka GmbH (Germany); Dyka Plastics S.A. (Belgium); Fairbrook PLC (United Kingdom); Farchemia S.R.L. (Italy); John Davidson Holding Ltd. (United Kingdom); Kerley Trading Inc. (United States); Lianyungang Taile Chemical Industry, Co. Ltd. (China); Limburgse Vinyl Maatschappij S.A. (Belgium); PB Gelatins France S.A.S.; Produits Chimiques de Loos S.A.S. (France); Tessenderlo Chemie S.A. (Belgium); Tessenderlo Chemie Hungaria Kft; Tessenderlo Chemie International S.A.; Tessenderlo Fine Chemicals Ltd. (United Kingdom); Tessenderlo Italia S.R.L.; Tessenderlo Kerley Inc. (United States); Tessenderlo Kerley Latino Americana S.A. (Chile); Tessenderlo Kerley Mexico S.A. de C.V. (Mexico); Tessenderlo Polska Sp. z.o.o.; Tessenderlo Schweiz AG; Tessenderlo U.S.A. Inc.; Tessenderlo UK Ltd.

Principal Competitors

Repsol YPF S.A.; BASF AG; Sungai Budi Group; Dow Chemical Company; OMK United Metallurgical Company; Lanzhou Chemical Industry Company; Zigong Honghe Chemical Company Ltd.; Votorantim Participacoes S.A.; E.I. du Pont de Nemours and Co.

Key Dates:

L'Union Française des Produits Chimiques & Matières Colorantes is established on a chemicals site in Tessenderlo dating from 1892.
The company becomes Produits Chimiques de Tessenderlo (PCT).
PCT merges into a joint venture, Produits Chimiques de Limbourg (PCL), with Potasses d'Alsace.
PCT exits the PCL joint venture.
PCT goes public on the Brussels Stock Exchange.
Mines de Potasse d'Alsace acquires control of PCT.
The company acquires Pont Brûlé and begins production of gelatin.
The company name is changed to Tessenderlo Chemie; PVC production is launched.
The company begins fine chemicals production.
All operations are merged under the Tessenderlo Chemie N.V. holding company.
The company begins an extension into production of PVC-based products, including pipes and fittings, window profiles and compounds.
The company acquires Caillaud of France and enters the natural derivatives market.
The company acquires the Wymar group, producer of window profiles, and enters the U.S. and Chinese markets.
The company enters Eastern Europe with the acquisition of a PVC compound plant in Poland.
The company acquires Accordis Fine Chemicals and John Davidson Pipes in the United Kingdom.
The company restructures operations along three primary business divisions: Chemicals; Specialties; and Plastics Converting.

Further Reading

Higgs, Richard, "Tessenderlo Invests in Brazil Profile Firm," Plastics News, December 21, 1998, p. 4.

"Tessenderlo Expands in Gelatine," International Food Ingredients, April-May 2003, p. 14.

"Tessenderlo Group's Double Investment," Fertilizer International, January-February 2005, p. 42.

"Tessenderlo Opens a New Chapter," Fertilizer International, September-October 1996, p. 53.

Walsh, Kerri, "Tessenderlo Buys Accordis Unit," Chemical Week, August 29, 2001, p. 23.

Warmington, Andrew, "Soap Stars: What Are the Competitive Issues in Fragrance Ingredients for Household and Personal Care Applications?," Specialty Chemicals, February 2004, p. 10.

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