Groupe Bolloré

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Groupe Bolloré

Tour Bolloré, 31-32 quai de Dion
Puteaux
F-92811
France
Telephone: +33 1 46 96 44 33
Fax: +33 1 46 96 40 83
Web site: http://www.bollore.com

Public Company
Incorporated: 1822
Employees: 33,411
Sales: EUR 5.39 billion ($6 billion) (2003)
Stock Exchanges: Euronext Paris
Ticker Symbol: BOL
NAIC: 325211 Plastics Material and Resin Manufacturing; 326113 Unsupported Plastics Film and Sheet (Except Packaging) Manufacturing; 424720 Petroleum and Petroleum Products Merchant Wholesalers (Except Bulk Stations and Terminals); 481111 Scheduled Passenger Air Transportation; 483113 Coastal and Great Lakes Freight Transportation; 488320 Marine Cargo Handling

Groupe Bolloré is a diversified industrial conglomerate with leadership status in most of its operating areas. Led by Vincent Bolloré, who gained fame as one of France's most successful corporate raiders, Bolloré represents the continuation of a family-owned business with roots in the early 19th century. The company continues to operate in that historical sector, producing specialty thin papers for the publishing, advertising, pharmaceutical, beauty care, and other industries. Bolloré's thin paper production comes from two plants, Papeteries du Léman and a new facility in the Vosges opened in 2003, with combined production of 95,000 tons per year. Bolloré is the world leader in the thin paper segment, with some 20 percent of the global market. Since the early 1980s, Bolloré also has built a leading presence in the global plastic films market. The company produces polypropylene film for capacitors, shrink-wrap packaging films, and related products. The company also has deployed the technological expertise gained from this division into development of a lithium-based automotive battery. A pet project of Vincent Bolloré himself, the battery, through the company's batScap division, was launched in 2004. Other parts of the Bolloré Group include international shipping and logistics, primarily through subsidiary SDV, with a particularly strong presence in Africa. The company is also the second largest independent fuel distributor in Europe, through the Bolloré Energie and Calpam names, with a focus on the French, Swiss, Dutch, and German markets. Bolloré Energie also controls 90 percent of SFDM, which operates the Donges-Melun-Metz oil pipeline and other fuel logistics facilities in France and Switzerland. Bolloré is perhaps best known for its financial dealings, which have included the purchase of significant stakes of many of France's best-known firms, such as Bouyges, Pathé, Lazard Frères, and others. In 2004, the company's portfolio included positions with Italy's Mediobanca and industrial group Vallourec, among others. Bolloré also has begun a drive to build its own media operations, taking stakes in film distributor Gaumont, advertising group Havas, the Mac-Mahon movie theater in Paris, French video streaming leader Steampower, production studio SFP, Radio New Talents, and a digital television station, Direct 8. Bolloré Group is listed on the Euronext Paris Stock Exchange. Nonetheless, Vincent Bolloré and other members of the Bolloré family control close to 90 percent of the group's shares. In 2003, Bolloré Group posted sales of EUR 5.39 billion ($6 billion).

Paper-Based Fortune in the 1800s

The Bolloré Group stemmed from a small, family-owned business founded near Quimper, on the coast of France's Brittany region, in the early 19th century. René Bolloré had traveled to China, where he had been introduced to the country's rice paper-making techniques. Back in France, Bolloré invented a means of machine-producing a similar thin paper, and launched his company in 1822. Bolloré's thin papers proved suitable for such uses as the pages for Bibles, tracing paper, and rolling papers for handmade cigarettes.

The Bolloré company grew into one of the leading paper producers in Brittany and in France, and the Bolloré family itself became a powerful financial force in the region. The development of the tobacco industry in the latter half of the 19th century, and especially the gradual shift in tobacco use from pipe and cigar smoking to cigarettes, offered new opportunities for the family-owned company's growth.

Bolloré's son, also named René and grandfather of Vincent Bolloré, recognized the potential of the rising new market and in 1893 the company built a new factory, in Cascadet on the Odet River. The new paper mill specialized in thin papers using flax and textile fibers.

True success for the family-owned company came after World War I. In 1918, with the market for cigarette tobacco and roll-your-owns growing rapidly, René Bolloré launched a new cigarette paper on the market—OCB, for Odet Cascadet Bolloré.

Over the next decades, OCB grew into France's leading cigarette paper brand. The brand enjoyed international success as well, and by the early 1950s the company claimed to have captured some 10 percent of the worldwide cigarette market, including pre-rolled cigarettes. The company continued to exploit new markets for its thin paper technologies as well, launching production of papers for use in capacitors in 1948. Teabags were also a strongly growing market for the company.

Saving the Family Firm in the 1970s

Bolloré also grew through external expansion. In the 1950s, Bolloré bought control of another well-known French cigarette paper manufacturer, Zig-Zag. That company had been founded by Maurice and Jacques Braunstein in 1879. Based in Paris, the company built a dedicated cigarette paper production plant, the Papeterie de Gassicourt, near the town of Mantes in 1882. The Braunsteins began developing new cigarette paper production technologies, and in 1894 launched the product that was to make the company famous the world over: the Zig-Zag brand of cigarette papers. The product owed its name to the company's patent overlap packaging technique.

Zig-Zag, OCB, and a third brand, JOB, enabled France to claim the vast majority of the world market for cigarette rolling papers by the late 1930s. The Braunstein company grew strongly, opening a new mill in Thonon in 1936. Following World War II, which destroyed the company's original facility, production was transferred to the Thonon site.

By the 1950s, however, Zig-Zag's heavy investments had brought it into financial difficulties. By 1959, the company had been acquired by Bolloré, with main rival JOB acquiring a significant stake as well. Under Bolloré, the Thonon facility became dedicated to the production of carbon paper, a fastgrowing paper segment, while the Zig-Zag brand was transferred to a new facility. Through the 1960s and into the 1970s the rolling paper market, despite losing sales to the rising popularity of packaged cigarettes, discovered a new market rooted in the era's counterculture.

Bolloré continued to seek out new markets through the 1960s. In 1969, the company made its first move into the production of polypropylene-based films, launching test production for a range of capacitor films. By 1972, the company was ready to launch full production. At the same time, Bolloré began production of aluminum-coated film. The company had high hopes for its new division, and sought entry for its products, and its other paper products, into the North American market through the creation of two U.S. subsidiaries, Bolloré Inc. and Bolmet, in 1978.

Yet declining cigarette paper sales, rising fuel costs, the long economic recession, and the high investment costs needed to launch polypropylene film production took its toll on Bolloré. The company also suffered somewhat from a lack of strong direction, as Michel Bolloré, the second René Bolloré's son, had left Brittany to live in Paris, and attempted to run the company from there. By the end of the 1970s, Bolloré faced bankruptcy. In order to save the company, Vincent Bolloré asked friend and mentor Edmond de Rothschild to buy the family-owned business in 1975.

Vincent Bolloré, born in 1952 and raised in Paris, began his career at Compagnie Financiere Rothschild, where he first served as deputy director in 1976. During this time, Bolloré also earned a law degree, attending night classes. By the early 1980s, as the Bolloré company appeared to be heading toward bankruptcy, Bolloré, joined by older brother Michel-Yves, convinced Rothschild to sell them back the family business. Rothschild did so, demanding a symbolic one franc.

Rise of a Financial Power Player in the 1980s

The Bollorés quickly found backing from Sébastien Piccioto, who agreed to invest FRF 10 million, in exchange for 50 percent of the company. The Bollorés then began restructuring the operation, selling off Zig-Zag to JOB in 1981. That year also marked the start of Vincent Bolloré's legendary deal-making: As part of the paper company's restructuring, Bolloré traveled to the factory near Quimper, where he climbed up on a crate and asked workers to accept a 15 percent cut in pay. The workers agreed.

Company Perspectives:

The commitments of the Bolloré Group: Ethics, human resources, the environment, and humanitarian work.

The Bolloré Group develops its strategy with a view to sustainable growth. Its objective is to anchor its development, along with its social, ethical and environmental concerns, in the long-term.

As a creator of innovative high-tech products, it strives to become a major player as well as to fuel economic growth and maintain a clean, healthy environment.

Thanks to its ongoing policy of research and innovation, its international development strategy and the sizeable investments it has made in recent years, the Bolloré Group boasts a leadership position in each of its industrial and service activities.

Bolloré now stepped up its focus on polypropylene film and capacitor production. In 1983, the company entered a new and fast-growing market, that for polypropylene-based shrink-wrap films. The following year, Bolloré established a subsidiary in Japan, Bolloré KK. In 1985, the company restructured itself, becoming Bolloré Technologies, and listing its shares on the Paris Stock Exchange's Secondary Market.

The public offering marked the start of Bolloré's rise as a diversified industrial group. In 1986, Bolloré bought out JOB, taking control of the world's three leading cigarette rolling paper brands, JOB, Zig-Zag, and OCB. In that year, also, Bolloré went a step further and bought up tobacco company Sofical, primarily active in Africa. That purchase transformed Bolloré into one of the African continent's major cigarette producers. Through Sofical, Bolloré next went after Société Commercial d'Affrètements et de Combustibles, or SCAC, which was France's leading freight-forward firm. Founded in 1885, SCAC primarily focused on freight routes to Africa. Yet in order to gain control of SCAC, Bolloré was forced into a takeover battle with venerable French shipping giant Delmas-Vieljeux.

Bolloré won that battle, earning a reputation as one of France's brightest deal-makers. In 1988, Bolloré put into place a new holding structure, a multi-level investment vehicle that received financial backing from a number of France's leading financiers, including Claude Bébéar, head of French insurance giant AXA. Other backers included Antoine Bernheim of Lazard, Crédit National, Clinvest, Italy's Agnelli family, and South Africa's Rupert. The company listed on the Paris Exchange's main monthly settlement board the following year.

The holding structure enabled Vincent Bolloré to eye a new wave of investments that earned him the nickname the "Prince of Cash Flow." One of Bolloré's first purchases under the new structure was that of Rhin Rhône, a fuel distribution subsidiary of Elf-Aquitaine. This purchase, in which Bolloré was forced to stand down resistance from the company, the governments, and its employees, helped create Bolloré's reputation as a fiercely determined deal-maker. The acquisition formed the basis of the later Bolloré Energie.

A flurry of deals followed, including taking control of car leasing group Mattei in 1989; acquiring fuel companies Calpam and Satramin in 1990; buying up Copigraph, a maker of carbonless paper, which enabled the company to exit carbon paper production; a joint venture with France's Seita tobacco monopoly, reinforcing the company's tobacco interests in Africa; and purchasing controlling stakes in Matlavuoto, which specialized in producing plastic films for capacitors. Vincent Bolloré's penchant for risk-taking proved too much for brother Michel-Yves, who left the company in 1991. Longtime partner Piccioto also left the company after a dispute over its direction.

Rebuilding the Empire for the New Century

Bolloré's deal-making nearly sank the company in the early 1990s. The bitter rivalry between Bolloré and Delmas-Vieljeux had continued into the new decade and culminated in Bolloré acquiring a significant stake in the venerable, but ailing, shipping company. Bolloré meant only to buy up a minority stake in the company—enough to enable him to demand a seat on the board of directors and a say in the company's direction. Yet Bolloré's enemy Tristan Vieljeux ultimately outmaneuvered Bolloré, orchestrating a ruling from the French SEC equivalent forcing Bolloré to buy up all of Delmas-Vieljeux. The ruling forced Bolloré to pay far more than Delmas-Vieljeux's worth. Bolloré soon discovered the extent of the company's problems, including a debt of some FRF 3 billion.

The deal appeared to have put an end to Bolloré's winning streak. Yet, with backing from some of France's most important financiers, Bolloré stayed afloat, restructuring the company's shipping holdings by merging SCAC and Delmas-Vieljeux into a new company, SDV. Another factor in Bolloré's successful resurrection was its acquisition of diversified conglomerate Rivaud, which gave Bolloré a strong source of cash flow from the group's banking, forests, plantations, and other holdings, as well as a strong treasury. In addition, Bolloré was able to sell off much of Rivaud to pay down debt.

Key Dates:

1822:: Rene Bolloré invents a process for manufacturing thin papers and founds a paper plant near Quimper, France.
1893:: The company establishes a second plant in Cascadet, on the Odet River, to produce cigarette papers.
1918:: The OCB rolling paper brand is launched.
1948:: The company begins producing paper for capacitors.
1972:: The production of polypropylene film is launched.
1975:: The company is sold to Edmond de Rothschild.
1978:: Two subsidiaries, Bolloré Inc. and Bolmet, are established in the United States.
1981:: Vincent Bolloré buys back the company.
1983:: The company launches shrink-wrap production.
1985:: The company goes public as Bolloré Technologies.
1988:: The company acquires SCAC.
1991:: The company acquires Delmas-Vieljeux, which is merged with SCAC to form SDV.
1992:: The Rivaud Group is acquired.
1997:: The company acquires Saga.
1999:: The company acquires the OT Africa Line.
2001:: The tobacco and cigarette holdings are sold off.
2004:: The company acquires a stake in Havas advertising as part of an extension into the media sector.

Into the new century, Bolloré continued to build up its core operations, even as Vincent Bolloré continued to make headlines for his hobby as a corporate raider. In 1997, Bolloré stepped up its international freight and logistics operations with the purchase of Saga, a leading French cargo handler. Two years later, the company acquired OT Africa Line, or OTAL, a British-registered roll-on roll-off specialist founded in Nigeria in 1975. Bolloré then expanded its Bolloré Energie subsidiary through the acquisition of the Donges-Melun-Metz oil pipeline in 2000. By then, Bolloré had merged SDV and Bolloré Technologies into a single structure, Bolloré Group. The company also began narrowing its focus around a core of plastic films, specialty thin papers, and shipping and logistics. As such, the company sold off its rolling paper operations in 2000, and 75 percent of its cigarette and tobacco business, Tobaccor, in 2001. The company also sold its African logging operations in 2002, amid criticism from the World Bank.

In the meantime, Vincent Bolloré continued to make headlines, acquiring stakes in such giant French operations as Bouygues, Pathé, Lazard Frères, and others. In each case, Bolloré was able to cash out on the acquired shares at a handsome profit. Bolloré did not cash out on all of its investment, however. As the company approached mid-decade, its intention to establish itself as a major media group had become clear. In the early 2000s, Bolloré had made a number of media purchases, including a stake in the Gaumont film distribution company, as well as interests in production, through SFP, Internet video services through Streampower, and the launch of Radio New Talents and the digital terrestrial television station Direct 8.

Bolloré's media ambitions gained scale in 2004 when Bolloré revealed that it had begun building a stake in the Havas advertising agency, one of France's largest. By the end of the year, Bolloré had amassed some 13 percent of Havas's shares. Although questions remained over Bolloré's intentions in the acquisition, few doubted that Vincent Bolloré would achieve his aims. After 25 years at the helm of the Bolloré Group, Bolloré had transformed the company from failing family firm to one of Europe's top industrial conglomerates.

Principal Subsidiaries

batScap; Bolloré Energie; Bolloré Investissement; Bolloré, Division Films Plastiques; Delmas-Vieljeux; IER; OT Africa Line; Papeteries du Léman; Saga; SDV.