39 Victoria Street
Our objective: to increase value for shareholders, as measured by earnings per share and dividend growth, by applying Wassall's management methods and philosophy. The Framework: devolution of operating responsibility to line management, setting effective financial controls and reporting systems and introducing worthwhile incentives based on performance. The Process: constant review of investment needs, product design and methods of operation and manufacture. The Result: management dedicated to total quality, to profit and to maintaining competitive positions in the markets that our products serve.
Ranked among the United Kingdom's top 500 companies, Wassall Plc is a "mini-conglomerate" with interests in an evolving amalgam of manufacturing interests. After more than 30 years in the retail shoe business, new management reincarnated the firm as a holding company in 1988. Within less than a decade, this new executive team used a series of acquisitions to transform Wassall from a small domestic retailer into a multinational manufacturing group. By the mid-1990s, over 82 percent of its sales were generated in North America, and less than 14 percent came from the U.K.
The company is often compared to Anglo-American conglomerate Hanson Plc, and in fact CEO J. Christopher Miller and director Philip G. Turner were executives with that company before moving to Wassall. Their holding company's diverse interests in cable, sealants, travel goods, bottle closures, and furniture all ranked among the leaders of their respective markets. Having multiplied its market value from £3 million in 1988 to more than £700 million by 1996, the company set its sights on Asia, acquiring a controlling interest in a Singaporean manufacturer of axles for semi-trailers.
Post-World War II Origins
The company was established in April 1956 in Leicester, England, and presumably named for its founder, J. W. Wassall. The retail shoe store went public seven years later as J.W. Wassall Ltd., and was reorganized as a public limited company, Wassall Plc, in 1982. Several factors likely explain a lack of published information on this firm's rather obscure first 32 years in business. First, Wassall was a relatively small company, having less than £3.5 million in annual sales by 1987. And while its stock was publicly traded, it probably did not warrant much attention from British analysts. Conversely, Wassall's track record since 1988 was so remarkable as to make the previous years pale in comparison. The company's operations in the 1990s had virtually nothing to do with its origins; in fact, Wassall's footwear interests were sold off in 1989. And finally, the company's new managers seemed far more interested in their creation's apparently unlimited future as a mini-conglomerate than its limited past as a mere retailer.
Advent of New Management in 1988
In September 1988, former Hansonites J. Christopher Miller and Philip Turner, along with investment banker David Roper and James Miller, merged their nascent investment firm into the shoe retailer, transforming Wassall into a holding company in the process. Their basic plan was to raise the value of their new property by trimming overhead and boosting productivity, then leverage this added value via new equity offerings on the stock market. Funds raised would be coupled with borrowings and used to purchase new makeover candidates. Like their strategic forebears at Hanson, Wassall executives did not necessarily seek out synergies among their conquests. Nor did they target businesses whose components were worth more than the whole. As an analyst for Hoare Govett Investment Research Ltd. noted in a 1992 report on the company, "Wassall is not just a 'buy, restructure, and run for cash conglomerate ... ." Instead, they concentrated on basic manufacturing businesses with leading market shares that seemed to be in need of a shape-up. As David Roper told Crossborder Monitor in 1996, "We want something we can put right by means of hard work and straightforward management techniques." At the core of Wassall's management methodology was an emphasis on lean operations and tight-fisted finances, but this frugality did not preclude investments in equipment or research and development. Instead of limiting themselves to businesses within their own fields of expertise, they concentrated on managing the holding company, delegating day-to-day management of the subsidiaries to their respective executives.
The team started out small, locally, and quickly, acquiring Evertaut, a British manufacturer of office furniture, for £11.2 million in 1988. Two acquisitions totaling £29.3 million followed in 1989: Hille Ergonom, a producer of office and auditorium seating and Antler, a leading brand of luggage in the U.K. By the end of 1989, Wassall's earnings nearly matched its pre-takeover revenues. Sales had multiplied from £3.3 million in 1987 to £38.9 million, and pre-tax profits burgeoned from £56,000 to £3.2 million.
International Expansion Begins in 1990s
Wassall commenced the 1990s with the £47 million acquisition of Metal Closures Group Plc, a bottlecap company with factories in the United Kingdom, Italy, and South Africa. Exhibiting another "Hansonesque" strategy, Wassall recovered £5.3 million of the purchase price with the sale of MCG Venus Packaging Ltd. that fall, and generated another £1.7 million via the divestment of Alucaps Italiana S.p.A. in February 1991.
With the U.K. acquisitions market fairly well "picked over," Wassall turned its attention to the New World in 1991. That year, it acquired DAP Inc., an Ohio-based manufacturer of caulks and sealants, for £50 million (US$90 million). DAP was an ideal takeover candidate for Wassall. With over 100 years in business, a leading market share, and the category's most widely recognized brand, it was unquestionably well-established. And despite two previous changes in ownership in less than ten years--during which time one might have expected the new parents to "clean house"--the company exhibited good potential for reorganization. Wassall wasted no time before grabbing its broom and dustpan, starting with a clean sweep of DAP's top layer of management. The new parent also shuttered four of DAP's nine plants, trimming 10 percent of the employee roster and 25 percent of its product line in the process. But in accordance with Wassall's philosophy, the restructuring was not just about cuts. The new parent re-emphasized product development and invested in state-of-the-art production equipment, for example. Within a year, Wassall had cut DAP's overhead by millions and boosted its profitability by over two-thirds.
Apparently hoping to augment its global position in adhesives and sealants, Wassall mounted a hostile £94.3 million bid for Britain's Evode Holdings late in 1992. Offended at the implied and blatant criticism inherent in Wassall's offer--any acquisition brought by the company insinuated that Wassall's executives viewed the target as "undermanaged"--Evode's executives rebuffed the offer as "unwelcome and wholly inadequate." Evode was able to convince its shareholders to hold out until early 1993, when Laporte Industries Holding brought a much more attractive, £129.4 million offer.
Wassall's executives settled for "organic" growth in 1992 and 1993, during which time sales more than doubled from £130.1 million (1991) to £277.8 million (1993). The budding mini-conglomerate's pre-tax income grew even faster, from £7.6 million to £27.6 million, boosted by ongoing efficiency and productivity enhancements.
Analysts would wait until 1994 for Wassall's "quantum leap acquisition," and when it came, many doubted its prudence. The holding company made its largest acquisition to date with the £177 million (US$269.8 million) purchase of General Cable Corp., a subsidiary of Cincinnati financier Carl Lindner's American Financial Corp. One of the world's largest wire and cable producers, General Cable tripled Wassall's size. Nevertheless, some industry observers questioned the wisdom of this purchase, pigeonholing General Cable as essentially a commodities dealer. The new parent cut employment by ten percent, closed three factories by 1995, and projected the rationalization of three more by 1997, and eliminated one warehouse. Wassall seemed to have little trouble "digesting" this major acquisition; its revenues increased from £277.8 million in 1993 to £972.9 million in 1995, and its pre-tax profit more than doubled from £27.6 million to £55.1 million.
Asia Targeted in Mid-1990s
Faced with fewer prime acquisition targets in Europe and North America, Wassall joined many multinational firms in conquest of Asian markets in the mid-1990s. In 1994, the company established an office in Singapore with the intent to cultivate export markets for its existing subsidiaries, but soon began applying its acquisitive methods to this high-potential region. But the firm soon found that it was not much easier to find "bargains" in Asia than it had been in the U.S. or U.K. due to a run-up in the local stock market. In 1995, however, Wassall paid £17.4 million (US$26.3 million) for a controlling interest in York Pacific Holdings Ltd., a manufacturer of truck axles. Renamed Wassall Asia Pacific Ltd., this new member of the family gave Wassall the top share of this niche market in Singapore, Malaysia, and Australia. The parent company hoped not only to use its newest conquest as a launchpad for its existing product lines, but also to exploit the region's notoriously low overheads via joint ventures and wholly-owned manufacturing sites.
The May 1996 divestment of four of its smallest affiliates to generate £11.5 million seemed to indicate that a new acquisition could be right around the corner.
Principal Subsidiaries: General Cable Corporation; DAP Inc. (U.S.A.); Antler Limited; MCG Closures Limited; Metal Closures Group South Africa Limited (South Africa); MCG Plascaps S.p.A. (Italy); Techno Pack Limited; Bentley Photo-Litho Co Limited; Evertaut Limited; Hille Limited; Ergonom Limited; Hille Auditorium Seating Limited; Wassall Asia Pacific Limited.
Principal Divisions: Cable; Consumer; Closures; Industrial and Commercial.
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