Yule Catto & Company plc

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Yule Catto & Company plc

Temple Fields
United Kingdom
Telephone: +44 127-944-2791
Fax: +44 127-964-1360

Public Company
Incorporated: 1863 as Andrew Yule & Company
Employees: 3,600
Sales: £510.78 million ($817 million) (2002)
Stock Exchanges: London
Ticker Symbol: YULC
NAIC: 325211 Plastics Material and Resin Manufacturing; 238160 Roofing Contractors; 322211 Corrugated and Solid Fiber Box Manufacturing; 325188 All Other Inorganic Chemical Manufacturing; 325212 Synthetic Rubber Manufacturing; 325510 Paint and Coating Manufacturing; 325520 Adhesive and Sealant Manufacturing; 325612 Polish and Other Sanitation Good Manufacturing; 326122 Plastics Pipe and Pipe Fitting Manufacturing; 326299 All Other Rubber Product Manufacturing; 327211 Flat Glass Manufacturing; 337215 Showcase, Partition, Shelving, and Locker Manufacturing; 424610 Plastics Materials and Basic Forms and Shapes Merchant Wholesalers

Yule Catto & Company plc is one of Europes leading specialty chemicals groups. Based in Harlow, Essex, England, Yule Catto operates in three primary areas: Polymer Chemicals, including water-based polymers, natural rubber latex, synthetic latex, resins, acetates, as well as products based on these raw materials, including medical gloves and latex-based carpet backing; Pharma and Fine Chemicals, operating primarily through the Uquifa pharmaceutical group and the Oxford Chemicals and PFW Aroma Chemicals flavor and fragrance ingredient producers; and Performance Chemicals, which produces niche products such as colorants, photographic chemicals, metal salts, and other chemicals. A steady series of acquisitions since the late 1990sas well as the disposal of its former building supplies operationshave allowed Yule Catto not only to expand as a specialty products group but also to enhance its international position. By the end of 2002, only 25 percent of the companys sales came from the United Kingdom. Europe generated nearly 38 percent of sales that year, while Asia added 16 percent to Yule Cattos revenues. The Americas provided approximately 13 percent; Yule Catto has acknowledged its interest in expanding into the North American market in the 2000s. Listed on the London Stock Exchange, Yule Catto is led by Chairman A.E. Richmond-Watson and CEO Alex Walker.

Combining Trade Agency and Rubber Plantations in the 1970s

The modern Yule Catto & Company was created in 1971 when rubber plantation holder Malaya General Company Ltd. bought shipping agent Yule Catto Ltd., changing its own name to Yule Catto & Company. Malaya General had been founded in 1908 in Malaysia and was active chiefly as a natural rubber producer through the 1960s. In the mid-1960s, however, Malaya General began to diversify its operations, acquiring a number of palm oil plantations in Malaysia as well. Yet the New Economic Policy adopted by the Malaysian government, which sought to enforce a Malaysianation of the countrys economic interests, forced British-held Malaya General to look elsewhere in order to ensure its future growth. The acquisition of Yule Catto, at a cost of £1.3 million, gave the company a new platform upon which to build its diversification.

Yule Catto had by then been in existence for more than 100 years. Englishman Andrew Yule traveled to India in 1858, where his familys business interests stemmed from the late 18th century. Andrew Yule began building his own fold of businesses through acquisitions, one of the first being the Hoolungpooree Tea company, which later became part of Andrew Yule & Company, established in 1863 in Calcutta, then the Indian capítol.

Yules company soon began acting as a shipping agent, and by 1866 had become the Indian representative for a number of insurance companies, as well as a textile company. Over the following decade, Yule continued to develop his business empire, adding, in 1875, coal, jute, and cotton companies as well. In that year, Yule was joined by two other family members, brother George Yule and their nephew David Yule. George Yule took over the leadership of the Yule companies, retiring in 1891. In that year, David Yule took over as head of Andrew Yule & Company. By then, the Yule companys holdings consisted of four jute mills, three tea companies, its own insurance company, and a cotton mill.

Under David Yule, the company grew into a major shipping agent between India and the rest of the United Kingdom, and Yule himself became one of the kingdoms wealthiest men. Yule began expanding the company, with a particular interest in its tea and jute operations. After buying out his uncles and becoming sole owner in 1902, Yule expanded the companys interests to include 18 tea companies and eight jute mills. Yule also added an inland shipping business, four coal companies, two flour mills, and an oil mill. Other acquisitions in the years leading up to World War I included a small railroad and a real estate company.

In 1911, David Yule sold the company to merchant banker Morgan Grenfell, the British arm of the JP Morgan banking empire. Yule remained on as chairman of the company, which retained the Andrew Yule & Co. name. Joining Yule at the company was Thomas Catto, who was named the companys vice-chairman. Catto quickly became the driving force behind the company, as the older Yule, by then Sir David, approached retirement. In 1920, the companys name was changed to Yule Catto. Thomas Catto, later Lord Catto, was named as managing director of Morgan Grenfell at the end of the 1920s.

The Catto family remained at the head of Yule Catto until nearly the end of the century. By the end of the 1960s, however, the company had lost much of its former prestige. The second Lord Catto, Stephen, born in 1923, who had been working as a merchant banker with Morgan Grenfell, had taken over the chairmanship of Yule Catto and had begun to diversify its interests, including a small plastics and building supplies business. The company also owned and operated a number of marinas.

In 1968, Yule Catto acquired the building supply business William J. Cox, founded in London in 1936. That company had specialized in molding and shaping plastics, and in 1950 had launched its first plastic rooflight. Sales of rooflights grew strongly through the 1950s, becoming the companys main business. In 1960, Cox created the brand name Coxdome for its rooflight products.

Dual Business Lines in the 1980s

Malaya General Companys acquisition of Yule Catto in 1971 became the start of the new Yule Catto & Company built, at first, around the building supplies business, as well as the Malaya General rubber plantations. The company remained modestly sized, however, with sales of just £3.6 million in 1973.

Acquisitions were to form a major part of Yule Cattos growth. Business materials became the companys priority in the mid-1970s, with the acquisition of a rival rooflight brand, Cordar, and other thermoplastic sheet operations, from Elders Walker & Co. Yule Cattos backing also enabled Cox to begin development of a new generation of rooflights, the thermally efficient Coxdome 2000, which was launched in 1981.

Malaysias New Economic Policy led Yule Catto to spin off its rubber plantations into a new company, Yule Catto Plantations Sendirian, created in 1978. Yule Catto then sold a 35 percent share of that company to the Johore State Economic Development Corporation. Rubber continued to play a major part of the companys operations, however, representing more than half of its revenues into the mid-1980s. Yet Yule Catto had begun looking about for other business opportunities. At the end of the 1970s, the company turned to the nascent offshore drilling market in the North Sea, acquiring a 20.6 percent stake in Gas & Oil Acreage. That holding was sold off after only a couple of years, however.

Key Dates:

Andrew Yule founds Andrew Yule & Company in Calcutta, India.
David Yule buys out uncles Andrew and George Yule.
Malaya General Company Limited is formed as holder of rubber plantations in Malaysia.
Majority control of Andrew Yule & Company is sold to merchant bank Morgan Grenfell.
Thomas Catto becomes chairman of Andrew Yule & Company, which changes name to Yule Catto Ltd.
Yule Catto, now based in England, buys building materials supplier William Cox.
Malaya General buys Yule Catto and becomes Yule Catto & Company.
Yule Catto acquires Revertex, entering specialty chemicals market; goes public on London stock exchange.
Yule Catto sells its rubber plantations in Malaysia.
Company acquires 50 percent of Synthomer, based in Germany.
Company acquires Oxford Chemicals, a maker of flavor and fragrance ingredients.
Company acquires Holliday Chemical Holdings, adding pharmaceutical and fine chemicals operations, including Uquifa in Spain, and begins exit from building materials sector.
Yule Catto gains full control of Synthomer.
Yule Catto places all fine chemicals and pharmaceuticals operations, including fragrance and flavor units, under Uquifa.
Company combines all polymer operations from Revertex and Harlow into Synthomer.

Instead, Yule Catto had found another target for its expansion. In 1981 the company launched a takeover of industrial chemical and paints concern Revertex. With a history going back to the beginning decades of the century, Revertex had also held a longtime partnership with Malaya General, having set up a plant on one of that companys plantations in the early 1950s to process its raw rubber latex. The Revertex acquisition represented a major change for Yule Catto, adding nearly £70 million in revenues per year. Revertex also had a strong synthetic rubber operation, as well as a line of compounds, resins, and emulsions for various applications. Following the Revertex acquisition, Yule Catto went public on the London stock exchange.

It also sold its stake in Gas & Oil Acreage to concentrate on building up its core building materials and chemicals businesses. In 1984, Yule Catto came in as a white knight with an offer to buy paint group Donald Macpherson, then under a hostile takeover attempt. Yule Cattos £22 million friendly bid was, however, topped by a Finnish company, which then received the approval of Macphersons board. Yule Catto continued its acquisition attempt, raising its offer to £24 million, but ultimately lost out in the bid.

Nonetheless, Yule Catto remained acquisitive through the 1980s, buying up chemicals group Reabrook in 1987; Greenhill, a specialist in aerosol chemicals and coatings founded in 1973; Nielson, which produced cleaning products for the bus and truck markets; and Arrow Chemicals. Yet, with chemical companies remaining highly priced during the 1980s, the company looked toward the lower-cost building materials market in its drive to build up its sales. In 1988, Yule Catto moved onto the European continent, buying up the Netherlands Kinnemade, a manufacturer of roofing products. In that year, also, the company made a move to break up its William Cox subsidiary into several new companies, relaunching its rooflight business as Coxdome Ltd. By then, Yule Catto had integrated a new operation, with the acquisition of Brencliffe, a maker of textiles for the automotive, janitorial, and, later, housewares markets. Textiles were to remain a tangential operation, however.

Specialty Chemicals Group in the New Century

The growth of the companys chemicals and building products divisions offset its shrinking rubber plantation operations, which were particularly hard hit during the recession of the early 1990s. By then, the companys historic activity accounted for less than 10 percent of operations. As it entered the new decade, Yule Catto decided to exit that business, focusing its growth on its dual building products and chemicals core, selling its plantations for £16.5 million in 1991. Yule Catto nonetheless remained active in the region, notably through its Revertex natural and synthetic latex processing operations.

The companys building products division took on new scale at the beginning of the decade, particularly after the acquisition of struggling Unilock, the leading maker of office wall partitions in the United Kingdom. In 1992, Yule Catto added Transplastix, which specialized in glazing and other building products. Despite the downturn in the U.K. construction sector in the early 1990s, building materials remained a highly profitableand high-margindivision for Yule Catto through much of the decade.

Yet the companys attention turned more and more toward its specialty chemicals wing. Yule Catto had already forged a relationship with Reichhold Chemicals, based in the United States and a maker of coatings, emulsions, and other chemicals, after the two companies had formed a synthetic latex joint-venture in the United Kingdom. In 1993, Yule Catto and Reichhold strengthened their relationship with the 50-50 acquisition of Germanys Synthomer Chimie, a maker of synthetic latex and other polymers with operations in Germany and the Netherlands. Yule Cattos share of Synthomer cost the company £18 million.

In 1994, Yule Catto entered another specialty chemicals niche, that of the flavor and aroma ingredients sector, with the acquisition of Oxford Chemicals. Two years later the company boosted its flavor and fragrance operations with the purchase of the Netherlands PFW Aroma Chemicals. By then, the company had acquired a 49 percent share of a synthetic resins operation, Dharan Harco Chemical Industries, based in Saudi Arabia.

With its building materials side strugglingthe company closed a money-losing Dutch unit in 1994Yule Catto stepped up its acquisition interests in the chemicals industry. The company sought to diversify its chemicals interests, which were largely based on synthetic latex and polymers on the one hand, and paints and emulsions on the other, with an entry into the pharmaceuticals and fine chemicals market. In 1997, Yule Catto announced its purchase of Englands Holliday Chemical for £255 million. Like the Revertex acquisition before it, the purchase of Holliday enabled Yule Catto to reposition itself, adding Hollidays line of pigments, dyes, metal salt compounds, pho-toprocessing chemicals and flexographic inks to its own specialty chemicals lines.

At the same time, Yule Catto gained control of Hollidays Uquifa pharmaceuticals subsidiary, founded in Spain in 1936. That company specialized in the production of generic active ingredients, including a range of antibiotics. Uquifa was also a major producer of ranitidine, the active ingredient in the highly successful ulcer treatment Zantac. Uquifas operations, which included plants in Italy and Mexico, also gave Yule Catto an entry into the fine chemicals market in the United States.

The Holliday acquisition led Yule Catto to dispose of its building materials division, a process completed by 2001. By then, the company had begun to take control of its joint ventures, buying out Reichhold in 1999 to take full control of the Synthomer U.K. and German operations. That acquisition cost the company £59 million. In 2001, Yule Catto bought out another longtime joint-venture, Harlow Chemicals, formed with Clariant to produce emulsions, paying £55 million. In that year, the company opened a new synthetic latex plant in Malaysia.

With full control of its former joint ventures, Yule Catto was free to pursue its international expansion, particularly onto the European continent, but with possible plans to enter the United States in the early years of the new decade. In the meantime, Yule Catto reorganized its operations along three core business divisions: Polymers, Performance Chemicals, and Pharma and Fine Chemicals, which also grouped the company aroma and flavor units. In 2002, Yule Catto took its reorganization a step further, grouping all of its polymer operations, including Revertex, under the Synthomer name. At the same time, Uquifa became the company name for its fine chemicals and pharma operations, which expected a new boost with the release of omeprazole, another ulcer medication, as a generic drug in 2003. Yule Catto had successfully transitioned itself as a major specialty chemicals group, while maintaining a link to a history spanning nearly 150 years.

Principal Subsidiaries

Arkem (Pty) Ltd (South Africa; 37.5%); Autoclenz Ltd; Brencliffe Ltd; Dhahran Harco Chemical Industries Ltd (Saudi Arabia; 49%); Harlow Chemical Co Ltd; Holliday Dispersions Ltd; Holliday Dispersions SA (France); Holliday Encres SA (France) 100; Holliday Chemical Españ;a SA (Spain); Holliday France SA; Holliday Pigments Ltd; Holliday Pigments SA (France); James Robinson GmbH (Germany); James Robinson India (Pvt) Ltd (51%); James Robinson Ltd; Oxford Chemicals Ltd; PFW Aroma Chemicals BV (Netherlands); Reabrook Ltd; Revertex Chemicals (Pty) Ltd (South Africa; 75%); Revertex Finewaters Sdn Bhd (Malaysia; 63%); Revertex (Malaysia) Sdn Bhd (Malaysia; 70%); Revertex (Thailand) Ltd (35%); Synthomer BV (Netherlands); Synthomer GmbH (Germany); Synthomer Ltd; Synthomer SA (Belgium); Union Químico Farmaceutica SA (UQUIFA) (Spain); Uquifa Italia SpA (Italy); Uquifa Mexico S.A.C.V.; William Blythe Ltd.

Principal Divisions

Polymers; Performance Chemicals; Pharma and Fine Chemicals.

Principal Competitors

Hitachi Ltd.; BASF AG; MedcoHealth Solutions Inc.; Dow Chemical Co.; Bayer AG; E.I du Pont de Nemours and Co.;Novartis International AG; ATOFINA; Honeywell International Inc.; Norsk Hydro ASA; SONATRACH; Teijin Indonesia Fibre Corporation; Norsk Hydro ASA; Edison SpA; Mitsubishi Chemical Corp.; Akzo Nobel NV; Goodyear Tire and Rubber Co.; Sumitomo Electric Industries Ltd.; CEPSA SA; Monsanto Lifescience Co.; Imperial Chemical Industries PLC; mg technologies ag; Solvay SA; Toray Industries Inc.; DSM Engineering Plastics North America Inc.; Mitsui Chemicals Inc.; Teijin Ltd.; Ashland Inc.; Occidental Chemical Corp.; BP France SA; Rhodia SA; DSM N.V.; GE Plastics.

Further Reading

Catto Sells Unilock, Chemical Week, May 23, 2001, p. 31.

Hume, Claudia, Yule Catto Boosts Capacity in Asia, Chemical Week, April 4, 2001, p. 19.

, Yule Catto Buys Reichhold Out of Latex JV, Chemical Week, December 8, 1999, p. 24.

Raleigh, Patrick, Good Tidings for Yule Cattos Latex Business, European Rubber Journal, May 2001, p. 18.

Scott, Alex, Yule Catto Looks to US Entry, Chemical Week, October 14, 1998, p. 76.

Upstarts and HoldoutsThe New Standard Bearers: Yule Catto, Chemical Specialties, September 2001, p. 18.

Yule Catto Rejig Expands Synthomer Portfolio, European Rubber Journal, February 2002, p. 10.

M.L. Cohen