Amer Group plc

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Amer Group plc

Makelankatu 91
Helsinki FIN-00601
Finland
Telephone: (+ 358)9-725-7800
Fax: (+ 358)9-7257-8200
Web site: http://www.amer.fi

Public Company
Incorporated: 1950 as Amer-Tupakka Oy; 1973 as Amer-yhtyma
Employees: 4,327
Sales: EUR 1.09 billion ($1 billion)(2000)
Stock Exchanges: Helsinki London
Ticker Symbol: AGPDY
NAIC: 339920 Sporting and Athletic Goods Manufacturing; 3122 Tobacco Manufacturing; 312229 Other Tobacco Product Manufacturing

Finland’s Amer Group plc is building a world-leading portfolio of sporting goods companies. The company owns Chicago-based Wilson Sporting Goods; Austria’s Atomic, producer of ski and snowboarding equipment under the Oxygen and Dynamic brand names; and, since 1999, fellow Finn Suunto, a maker of high-performance wristwatches (the company prefers “wrist computers”) and other accessories for the sports and outdoors markets. Amer is also Finland’s leading manufacturer and distributor of cigarettes, cigars, and other tobacco products, the company’s historic activity, which accounts for 9 percent of its annual sales. Yet sporting goods has become the company’s strategic focus. The company groups its operations into the Golf, Racquet, Team Sports, Winter Sports, and Outdoor and Sports Instruments divisions. Wilson, which manufactures equipment for the first three divisions, is also the company’s largest subsidiary, accounting for some two-thirds of annual sales. The United States is also Amer’s primary market, representing more than half of the company’s sales. Europe, excluding Finland, adds another 25 percent of sales, while Finland, incorporating the company’s tobacco sales, accounts for 11 percent of the company’s sales. Amer’s shares are traded on the Helsinki and London stock exchanges and through the United States’ OTC market through an ADR facility. The company posted sales of more than EUR 1 billion in 2000.

Smoking Start in the 1950s

Amer was founded in 1950 as Amer-Tupakka Oy, or Amer Tobacco, in order to manufacture and distribute American-style tobacco products in Finland. The company’s founders were four education-oriented organizations: the Finnish Association of Graduate Engineers, the Finnish Association of Graduates in Economics and Business Administration, the Land and Water Technology Foundation, and the Student Union of the Helsinki School of Economics and Business Administration. The four organizations launched Amer with the intention of using the company’s sales to fund educational and research programs in Finland.

One of Amer-Tupakka’s first business successes was its introduction of the Boston brand of American-style, Virginia-blended tobacco cigarettes. By the end of the 1950s, the company already had established itself as one of the country’s major tobacco companies. A licensing agreement to manufacture and distribute Philip Morris’s cigarette brands in Finland boosted the company’s sales even higher, enabling it to establish itself as the country’s dominant tobacco company.

By the mid-1960s, Amer’s tobacco profits had outpaced the needs of its education and research programs. The company decided to invest its profits in other activities, taking the first step toward becoming somewhat of an industrial conglomerate. The company purchased three ships, forming a shipping company to manage its small fleet. Its new activity gave the company a new source of profits. Yet the rise of air cargo activity began to cut into the worldwide shipping market. The company decided to divest its shipping interests, a process begun during the 1970s and completed with the sale of its last ship in 1981.

By then, the company already had begun to pursue other interests. In 1970 Amer acquired Finnish encyclopedia and textbook publishing company Weilin + Göös, establishing its Printing and Publishing division. Amer, which restructured as Amer-yhtyma Oy (Amer Group Ltd.) in 1973, began adding to its new division with a number of acquisitions, culminating in the purchase of Time/System International, a maker of personal agendas and the like in 1987. Amer also formed a Paper division, after acquiring Hyppòla in 1979. Later known as Amerpap, the acquisition marked the first of several, including that of Chicago’s Hobart/Mclntosh Paper Company, and other acquisitions in Belgium and The Netherlands. The company maintained its Printing and Publishing division until the late 1990s, selling off Weilin 4- Gòòs in 1995 and shutting down the division altogether with the sale of Time/System International in 1997. By then, Amer had exited the paper business as well, selling off its holdings in this division by 1994.

Yet the 1970s also had marked the beginning of Amer’s interests in sporting goods. The company’s first purchase in this area was the acquisition of hockey equipment manufacturer Koho-Tuote Oy in 1974. Amer then boosted its youngest division with the purchase of the Koho brand’s U.S. distributor in 1978, followed by the acquisitions of HockeyCanadien Inc., and that Quebec, Canada company’s “Canadien” brand hockey sticks in 1979. Amer added another Quebec company, Sherbrooke Sports Division, which manufactured protective equipment for ice hockey players. Although its interest in sporting goods later came to define the company, Amer’s involvement in ice hockey came to a close in 1986, when it sold off all of its ice hockey operations.

By then, Amer had gone public, listing on the Helsinki stock exchange in 1977 and becoming the second Finnish company to obtain a listing on the London stock exchange in 1984. The company also began selling its shares through an ADR facility on the U.S. OTC market. Amer continued to display a taste for diversified activities. In the late 1970s the company had built up a domestic distribution business, obtaining licenses to import and market such brands as Zebra, Montblanc, Seiko, Casio, and others. In 1984, the company also entered the automobile business, buying up the country’s largest automobile importer, Korpivaara. That company also brought Amer operations in plastics manufacturing, notably the Terhi brand of plastic boats. The company formed a Plastics Division in 1987 after acquiring a majority share of Denmark-based plastics distribution company, Rias A/S. The company dropped its plastics operations in 1990, selling off Korpivaara.

In 1985, Amer turned to the textiles industry, acquiring Marimekko. That company had shot to fame at the beginning of the 1960s when then First Lady Jacqueline Kennedy bought a number of Marimekko’s maternity dresses. Yet Amer’s ownership of Marimekko accompanied a decline in its fortunes. After Ma-rimekko posted losses through the end of the decade, Amer divested the company and exited the textile industry.

Sporting Focus in the 1990s

Despite exiting the ice hockey arena, Amer remained interested in the sporting goods field. In 1986 the company acquired Jack Nicklaus’s MacGregor Golf Company, which became the centerpiece of its new Sports Division. That division took on new weight in 1989 when Amer paid $200 million to acquire Chicago’s Wilson Sporting Goods, instantly transforming the Finnish company into one of the world’s sporting goods leaders.

Wilson had been at the center of the sports world since its founding in 1916. Originally known as Ashland Manufacturing Co., the company had been formed to make use of animal byproducts left over from its parent company’s meat-packing and slaughterhouse activities. The company began marketing a range of products, ranging from surgical sutures to tennis racquets and racquet strings to shoes for baseball players. When Thomas Wilson took over as president of Ashland, the company, renamed Thomas E Wilson Co., moved to its own manufacturing facilities and began its focus on sports products.

Wilson especially became known for its commitment to developing high-performance products for a wide variety of sports fields. From the outset, the company grew through a long line of innovative products and a number of acquisitions, from that of Hetzinger Knitting Mills, its first purchase in 1916, through to the acquisition of DeMarini Sports Inc., made in 2000. Along the way, Wilson also had established a reputation for its products in a variety of sports fields, from baseball, football, and basketball to tennis and golf. Wilson was also a pioneer in cooperating with noted sports personalities, such as its long-standing association with coaching great Knute Rockne.

Wilson became known as Wilson Sporting Goods Co. in 1931. The company remained a part of its original meat-packing owner—which adopted the Wilson name for itself—until their acquisition by Dallas aerospace group Ling-Temco-Voughtin 1967. Wilson came under PepsiCo’s control in 1970. Under PepsiCo, Wilson was split up into its main product categories, which became more or less independently operated divisions with their own marketing and distribution departments. Wilson was sold to Wesray Capital Corporation in 1985 before finding a new parent in Amer in 1989.

Streamlined for the New Century

Amer began steamlining its diversified operations in the 1990s. By the end of the decade, the company had pared down its activities to just its Amer Tobacco unit and its growing sporting goods unit. Wilson now formed the centerpiece of this latter division; throughout the end of the 1980s and the early 1990s, the company’s MacGregor Golf Company operations had suffered from the extended economic recession, slipping into losses. With its products overlapped by those of Wilson, MacGregor was sold off to British company Masters International Ltd. in 1996.

Company Perspectives:

Amer Group’s target is to become the undisputed leader in the global sports equipment market.

Amer continued to pursue the reorganization of its other operations, ceding its plastics, distribution, paper, printing, and publishing businesses as the company redefined its core activities. The acquisition of Austrian winter sports equipment manufacturer Atomic, and its Oxygen and Dynamic brands, in 1994, helped Amer move closer to a new definition for its future. Meanwhile, the company, which was posting losses at mid-decade, announced a three-year restructuring of its operations, regrouping its sporting goods activities around the new Golf, Racquet, Team Sports, and Winter Sports divisions.

Amer made a firm commitment to its sporting goods interests in 1997. Declaring its intention to becoming the world’s leading sporting goods company, Amer divested the rest of its noncore operations, keeping only its highly profitable Amer Tobacco unit. That division was comforted by the renewal of the company’s long-term Philip Morris license, and the award of a manufacturing and distribution contract from Swedish Match, both in 2000.

In 1998, Amer pursued the next phase of its restructuring, streamlining the somewhat unwieldy distribution system inherited through the Wilson acquisition. Both Wilson and Atomic were reorganized as Amer put into place a true worldwide distribution system. The result was a return to profitability—and strong profit growth—throughout the sporting goods divisions.

Amer promised not only a streamlined organization, but a renewed commitment to technological innovation throughout its sports products categories, particularly in what the company called “game improvement products.” Among those introduced at the turn of the century were the Rollers tennis racquets, the first to feature moving parts; the Reaction volleyball, featuring “Floating Cover Technology”; the Deep Red Driver; and the Device Step In System snowboard binding.

Rounding out the company’s product categories was the acquisition of fellow Finnish company Suunto, a maker of high-performance sports and outdoors instruments, including wrist-watches and “wrist computers” and gauges and instruments for the diving market. The December 1999 purchase created a new division in the company. The year 2000 saw another acquisition, that of Chicago’s DeMarini Inc., a maker of bats for softball and baseball, which was placed under the Wilson Sports Co.

By the beginning of its 2001 fiscal year, Amer was posting strong profits, among the best in its industry. The company then confirmed its strategy of continuing to build sales by as much as 10 percent per year through the year 2004, toward claiming the global leadership position as a sports equipment manufacturer. Celebrating its 50th year in business, Amer marked the turn of the century with a more unusual honor. A volleyball dubbed “Wilson” was featured in the hit film Cast Away —and went on to win the award for Best Inanimate Object in a Motion Picture, a category specifically created for the Wilson company product and its role as sole companion to a stranded Tom Hanks by the Broadcast Film Critics Association for the Critics Choice Awards.

Principal Subsidiaries

Amer Holding Company (U.S.A.); Amer Sport AG (Switzerland); Amer Sport Oy; Amer Tobacco Ltd.; Amera Oy; Amernet Holding BV (Netherlands); Atomic Austria GmbH (95%); Konemuovi Oy; Suunto Oy; Wilson Sporting Goods Co. (U.S.A.).

Principal Competitors

adidas-Salomon AG; Callaway Golf Company; Fortune Brands, Inc.; Head N.V.; K2 Inc.; Nike Inc.; Northwestern Golf Company; Pacific Dunlop Limited; Rawlings Sporting Goods Company, Inc.; Skis Rossignol S.A.; Spalding Holdings Corporation; TaylorMade Golf Company, Inc.

Key Dates:

1916:: Ashland Manufacturing Co. is founded.
1917:: Ashland becomes Thomas E. Wilson Co.
1931:: Wilson becomes Wilson Sporting Goods Co.
1950:: Amer-Tupakka Oy is started.
1961:: Amer receives Finnish Philip Morris license.
1965:: Amer begins shipping division.
1970:: Amer acquires Weilin + Göös; PepsiCo acquires Wilson.
1973:: Amer changes name to Amer-yhtyma (Amer Group).
1974:: The company acquires Koho-Tuote Oy.
1977:: The company is listed on the Helsinki Exchange.
1979:: The company establishes Paper Division.
1984:: The company is listed on the London stock exchange; Korpivaara is acquired.
1986:: The company acquires MacGregor Golf Company.
1989:: The company acquires Wilson Sporting Goods Co. (U.S.A.).
1994:: The company acquires Atomic (Austria).
1997:: The company is restructured as sporting goods manufacturer.
1999:: The company acquires Suunto.
2000:: The company acquires DeMarini Inc.