Gateway House, Basing View
Arjo Wiggins Appleton p.l.c. is one of the world's leading producers of premium paper products, ranging from carbonless papers used for facsimile paper, forms, and credit card receipts, to thermal papers, and premium fine papers and specialty papers, such as art and tracing papers. Until 2000, Arjo Wiggins Appleton was also a world-leading paper distributor. In February of that year, the company spun off its merchanting division, renamed Antalis, as a separate company, distributing all shares in Antalis to its shareholders. A product of a series of mergers in the early 1990s, Arjo Wiggins spent most of that decade struggling to achieve integrated operations. A thorough restructuring starting in 1999, led by Chairman Ken Minton, reorganized the company into separate operating companies grouped along product lines, each with its own chief executive officer. After beginning the Antalis demerger process, expected to be completed by the third quarter of 2000, the company regrouped around its two remaining divisions--Carbonless and Thermal papers, and Premium Fine, Specialty & Coated papers. These two divisions together accounted for a little more than half of Arjo Wiggins Appleton's 1999 sales of £3.36 billion. Despite the impending demerger of the Antalis division, which remains Europe's leading paper distributor and among the top paper distributors worldwide, Arjo Wiggins Appleton has continued to invest in its growth, including the acquisition of two European wholesale promotional products distributors, Röder & Co. of Germany and Mostra Importaciones S.A. of Spain. At the same time, the company, which remains the leading manufacturer of carbonless papers worldwide, has taken steps to reduce its exposure to what is seen as a mature--and possibly doomed--market by boosting its activities in other value-added papers categories. Arjo Wiggins Appleton also holds a 40 percent share of publicly traded SOPORCEL, Portugal's leading pulp producer. Some 40 percent of Arjo Wiggins Appleton itself is held by the SOMEAL (Agnelli family) investment vehicle, taking over the stake formerly held by French conglomerate St. Louis.
Cross-Continental Mergers in the 1990s
Arjo Wiggins Appleton was formed by the mergers of three companies: Wiggins Teape of the United Kingdom, Appleton Papers of the United States, and Arjomari-Prioux of France. These three companies represented operations dating back to the early 18th century and beyond. The oldest of the three was Wiggins Teape, which was known as Jones, Wiggins and Teape in 1850, when Henry Teape and Edward Wiggins purchased partnerships in a paper mill already in existence for more than 100 years. Teape and Wiggins later took over full ownership of the paper company, renaming it Wiggins Teape Ltd. During the 20th century, Wiggins Teape shifted its production to the growing market for specialty papers--a segment that included papers for artistic drawing and painting, tracing papers used in the engineering and architectural markets, and other paper types.
Wiggins Teape built up a strong share of the specialty paper market in the United Kingdom, becoming one of the region's largest by the end of the 1950s. Wiggins Teape also extended its range into the so-called 'carbonless' paper market, a new technology that enabled customers to dispense with carbon paper for making copies, such as for credit card receipts or business invoices and other uses, especially requiring signatures. Carbonless paper represented a high-growth sector until the mid-1990s, when, with the emergence of new printing and electronic invoicing and other technologies, the carbonless papers had reached maturity.
The 1950s saw the emergence of one of Wiggins Teape's later partners. During that decade, four French paper mills--those of Arches, Johannot, Marais, and Rives--merged their businesses, using the beginning of each mill's name to create the Arjomari paper company. Arjomari, with operations located primarily in the Lorraine region, soon became one of France's leading paper producers. By the end of the 1960s, Arjomari had begun to grow into one of the principal paper producers, especially of specialty and decorative papers, in Europe. In 1968, the company merged with fellow French paper producer Prioux-Dufournier, changing its name to Arjomari-Prioux. By the end of the 1980s, Arjomari-Prioux was one of Europe's top five paper producers. It also had powerful financial backing, with French conglomerate St. Louis holding 40 percent of the company's shares.
Meanwhile, Wiggins Teape Ltd. had acquired new ownership. In the early 1960s, as the first antismoking laws were being introduced, tobacco giant British American Tobacco (BAT) had begun diversifying its operations in order to reduce its reliance on tobacco. As part of its diversification, BAT began buying up shares in Wiggins Teape. By the end of the 1960s, BAT had acquired full ownership of Wiggins Teape. BAT continued to build up its paper holdings through the 1970s, culminating by the end of the decade in the acquisition of Appleton Papers of the United States, giving the conglomerate not only paper operations on two continents, but also the world's leading share of the carbonless paper market. Appleton, long one of Wiggins Teape's main competitors, remained a separate--and often competing--company under BAT's ownership.
Reorganizing for the 21st Century
By the late 1980s, BAT itself had come under attack. Weakened by steadily tightening antismoking legislation and by the troubled stock market, BAT found itself the subject of famed corporate raider Jimmy Goldsmith's attention. Goldsmith's hostile takeover attempt targeted the whole of BAT for breakup, a popular means of generating shareholder profits in the late 1980s. To fight off the attack, BAT instead spun off its paper division in 1989. The following year, Wiggins Teape and Appleton Papers formally joined forces, becoming Wiggins Teape Appleton. The new independent company ranked in the world's top five paper producers, with annual revenues worth approximately US$1.5 billion.
By 1991, Wiggins Teape Appleton, which maintained BAT's former global leading position in the carbonless paper market, sought to extend its market dominance into other paper product sectors. The company joined with France's Arjomari-Prioux, which by then, with annual revenues of more than FFr 8.2 billion, had taken the French lead in paper production, ahead of rival Aussedat Rey, a subsidiary of International Paper. The merged entity, renamed Arjo Wiggins Appleton, headed into the troubled decade.
As the Independent wrote in 1999: Arjo Wiggins Appleton was 'a text-book example of how mergers--especially cross-border ones--go wrong.' With more than 45 paper mills in Europe and the United States, as well as a 43 percent share of SOPORCEL, a pulp producer based in Portugal and jointly held with the Portuguese government, Arjo Wiggins Appleton represented one of the worldwide paper industry's heavyweights. Yet the company made little effort to merge its far-flung operations. Instead, the three units continued to be operated as more or less independent companies and focused on geographic divisions rather than product lines. As a result, Arjo Wiggins Appleton came to find itself saddled with an inefficient, often redundant operation.
This situation was exacerbated by the collapsing economic climate of the late 1980s and early 1990s. The recession of the period, which in Europe extended well into the middle of the decade, created a price war among paper producers. The paper industry in turn responded by ramping up production, quickly leading to a market glut. At the same time, pulp prices dropped sharply. Arjo Wiggins Appleton's inability to integrate its multinational operations left it top-heavy and unable to respond quickly enough to the changed economic climate.
By 1993, the company had lost the CEO behind the merger, Stephen Walls, who was replaced by Alain Soulas. Arjo Wiggins Appleton's CEO office seemed to have a revolving door during the decade: less than three years after his arrival, Soulas was dismissed. This trend was to continue through the decade. In the meantime, the company attempted something of a restructuring, closing some of its plants, including a paper mill in Germany, while cutting back its workforce. Between 1990 and 1993, the company had shed 12 percent of its payroll.
Nonetheless, Arjo Wiggins Appleton's problems continued into mid-decade. The company appeared rife for a breakup, especially after the departure of Alain Soulas and the arrival of St. Louis chairman Daniel Melin as Arjo Wiggins Appleton's deputy chairman and chief executive. Melin led the company on a strategic review--with analysts suggesting the industry brace itself for a breakup of the company's components, particularly its European manufacturing operations. Yet the company's slumping share prices made a breakup less than attractive.
Instead, Arjo Wiggins Appleton continued shedding jobs and engaging in what was suggested was a halfhearted attempt to restructure operations. In 1996, the company announced a new series of job cuts across its European operations, amounting to some seven percent of its European workforce. Slumping sales across the industry, as customers held back on orders while waiting for falling pulp prices to be reflected in paper prices, only added to Arjo Wiggins Appleton's woes. In March 1997, Melin stepped down, replaced by Philippe Beylier, who had been one of the chief architects in building Arjomari in the late 1980s.
The collapse of pulp prices opened the way for a wave of consolidation moves across the paper industry, highlighted by the merger between Kimberly-Clark and Scott Paper in 1996. In 1997, Arjo Wiggins Appleton, too, began looking for partners--turning to South Africa's Sappi International for a merger of the two companies' coated wood-free papers operations. The proposed merger fell through, however. Meanwhile, Arjo Wiggins Appleton continued the restructuring begun in 1995, including cutting more jobs.
While struggling to raise its position in the late 1990s, Arjo Wiggins Appleton was confronted with its exposure to the carbonless paper market. Said to have long reached its maturity, carbonless paper had started to see declines in its sales, as new technologies, such as the use of laser printers, electronic invoicing methods, and the introduction of fax machines capable of using plain papers, began to offer cheaper and more attractive alternatives. By the end of the 1990s, Arjo Wiggins Appleton had made little progress in reducing its pressures. Despite maintaining profitability through the second half of the decade, the company's revenues were slipping, back from a high of £3.56 billion in 1995.
The arrival of a new majority shareholder, as the Agnelli family of Italy--through their investment vehicle SOMEAL&mdashøok over St. Louis's 40 percent shareholding, seemed to offer the company new perspectives. The company's new chairman, Ken Minton, began taking long overdue steps to integrate the company's operations along product lines, rather than according to geographic location. During 1999, the company's new organization was put into place. Arjo Wiggins Appleton now was separated into three divisions--Carbonless and Thermal; Premium Fine, Specialty & Coated; and Merchanting--which were to operate more or less as independent companies. Instead of a single CEO for the entire group, each division was appointed its own chief executive, resulting in the departure of Beylier in 1999.
As part of the new restructuring drive, the company began streamlining its operations, closing plants, and eliminating redundancies in production. The company also made a series of strategic acquisitions, including the purchases of Papel del Solto, of Brazil, in January 2000, and Van Houton Palm, a Netherlands manufacturer of banknote paper, in February. At the same time, the company strengthened its paper distribution division with the acquisition of Röder & Co. of Germany and Mostra Importaciones S.A. of Spain, both of which boosted the merchanting arm's position in the wholesale promotional products sector.
The year 2000 marked more significant changes, as Minton announced that the company intended to merge all of its distribution subsidiaries into a single, internationally operating concern, Antalis. The new company was to be spun off from Arjo Wiggins Appleton by year's end, with shares of Antalis being distributed to the company's shareholders. The spinoff was greeted as a strong move toward concentrating Arjo Wiggins Appleton's operations around a manufacturing core, as the company moved to retain its position as one of the world's primary paper producers for the 21st century.
Principal Subsidiaries: Appleton Papers Inc. (U.S.A.); Arjo Wiggins Ltd.; Arjo Wiggins Belgium SA (Belgium); Arjo Wiggins Deutschland GmbH (Germany); Arjo Wiggins Italia Srl (Italy); Arjo Wiggins Limited; Arjo Wiggins SA (France); Bernard Dumas S.A. (France); Industria de Papel de Solto Ltda (Brazil); Newton Falls Inc. (U.S.A.); Papeteries du Bourray S.A. (France); SOPORCEL (Portugal; 40%); Usiplast S.A. (France).
Principal Competitors: Amcor Limited; Boise Cascade Corporation; Buhrmann; Champion International Corporation; FiberMark; Georgia-Pacific Group; International Paper Company; Mead Corporation; Nashua Corporation; Oji Paper Co., Ltd.; PWA Group; Rexam PLC; Svenska Cellulosa Aktiebolaget SCA; UPM-Kymmene Corporation.
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