Sophus Berendsen A/S

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Sophus Berendsen A/S

Klausdalsbrovej 1
DK-2860 Soborg
Denmark
Telephone: (+45) 39 53 85 00
Fax: (+45) 39 53 85 85
Web site: http://www.berendsen.com

Wholly Owned Subsidiary of The Davis Service Group Plc
Incorporated: 1897
Employees: 6,791
Sales: DKr 3.87 billion ($483.75 million) (2001)
NAIC: 421830 Industrial Machinery and Equipment Wholesalers; 421840 Industrial Supplies Wholesalers; 421850 Service Establishment Equipment and Supplies Wholesalers; 812320 Dry Cleaning and Laundry Services (Except Coin-Operated); 812331 Linen Supply; 812332 Industrial Launderers

Sophus Berendsen A/S is one of Europe’s leading business-to-business textile services groups. Based in Denmark, Berendsen is the market leader in that country, as well as in neighboring Sweden and Norway. It also holds strong positions in The Netherlands and Germany and is active in Estonia and Poland. The company provides textile products and services, hygiene products and services, and safety products and services to the hospital, restaurant, hotel, nursing home, public buildings and facilities, and other services providers. The company’s services range from providing floor mat services and linen services to supplying work uniforms for various industries. The company also has developed its own range of textile handling and logistical systems and products, including Etage, a textiles and accessories delivery system for hotels, hospitals, and nursing homes; Quickly, a mop and bucket system; Link-Mat, a system for connecting floor mats, enabling modular designs using multiple floor mats; Unilin, a labeling system based on microchips; Unimat, which provides onsite uniform management; and Food-Tex, a range of textiles developed specifically for the food processing, restaurant, and other food-related in dustries and sectors. Led by Managing Director Henrik Brandt, Sophus Berendsen has streamlined its operations to focus wholly on textile services at the turn of the century. The company also has become a leader in the consolidation of the European textiles services market, which is expected to take off in earnest in the early years of the new century—in March 2002 the company received a takeover offer from the United Kingdom’s Davis Service Group. The merger, approved later that year, created Europe’s leading textile services company, and also marked the end of nearly 150 years of independent existence for Sophus Berendsen.

Steel and Glass Shipper in the 19th Century

The Great Exhibition of 1851 in London provided the inspiration for the founding of the Berendsen business. In that year, Sophus Berendsen had traveled to England and was struck by the iron-and-glass construction of the famed Crystal Palace, built especially for the exhibition. The use of iron girders in the Crystal Palace’s construction was a novelty at the time. Yet Berendsen recognized the potential of the new building material, particularly for the increasingly crowded urban centers of the Industrial Era.

Berendsen set up his own business in 1854 and began importing iron girders to the Danish market from the United Kingdom and from Belgium. Rapidly expanding Copenhagen, which was seeing its population grow by more than half again before the end of the 1800s, presented a ready market for Berendsen. Iron girders enabled the construction of taller and more fire-safe buildings. Berendsen’s early recognition of the potential of iron girders quickly enabled his company to capture the leading share of the import market in Denmark. The company soon expanded, importing glass as well.

Berendsen died in 1884, leaving the business to his wife, who died two years later. The company then was led by their son, Albert Berendsen. The younger Berendsen expanded the business, branching out the company’s import operations into other industrial areas, such as materials for the shipbuilding and railroad industries. In 1897, Berendsen formally incorporated the expanded company as Sophus Berendsen A/S. When Albert Berendsen died that year, leadership of the company was given to Ludvig Elsass.

Just 27 years old when he was appointed the company’s managing director, Elsass remained at the company’s head into the 1950s and was responsible for leading the company into new directions. One of these, like the company’s origins, was inspired by the new urban realities created during the Industrial Revolution. The intense crowding of the world’s cities during the time, as well as the generally unsanitary living conditions found in Europe in particular, had brought on a surge in urban rodent populations, especially of disease-carrying rats.

Working in Aalborg, Denmark, pharmacist Georg Neumann discovered a strain of bacteria in 1902 that proved lethal to rats, yet harmless to people. Calling his discovery Ratin, Neumann set up a new business, Bakteriologisk Laboratorium Ratin, in 1904 and began marketing Ratin in Denmark. Sophus Berendsen took an interest in the product, and given its longstanding import relationship with the United Kingdom, acquired the exclusive marketing license for the United Kingdom. The company opened its first U.K. sales office in 1906.

Pest control was to become one of Sophus Berendsen’s most lucrative activities. In the meantime, the company continued to diversify its import interests. Beginning in 1912, the company added a range of technical products for such areas as the marine and railroad industries, and installations such as radar and navigation systems.

In 1927, Sophus Berendsen expanded its U.K. sales office as a full-fledged subsidiary company, placing it under the leadership of Karl Gustav Anker Petersen. The new company, called the British Ratin Company, expanded from being a simple sales agent to providing pest control services; it also began a mailorder operation for Ratin, substantially boosting sales. By the following year, however, British Ratin ended sales of the pesticide to concentrate fully on the service sector. Over the following decade, the company expanded rapidly throughout England. By the beginning of the 1940s, British Ratin expanded into insect control services as well, making its first acquisition, of Chelsea Insecticides. The company later brought its insect control division under the subsidiary name Disinfestation Ltd.

By then, Sophus Berendsen had taken over the production of Ratin in Denmark. With the outbreak of World War II, however, the company transferred Ratin production, as well as the division’s headquarters, to the United Kingdom. Following the war, Sophus Berendsen, through British Ratin, continued making new acquisitions, as well as entering new services areas. In 1952, for example, British Ratin introduced its first line of termite control treatment products. That segment was to take a jump forward in 1957, when British Ratin acquired woodworm and dry rot control specialist Rentokil.

That company had been founded in 1925 by Harold Maxwell Lefroy, who had developed a means of exterminating the death water beetle, an infestation of which had been threatening Westminster Hall. Lefroy, assisted by Elizabeth Eases, had come up with a formula in 1924, which they called “Ento-Kill.” Since a similar name already had been registered as a trade name, Lefroy instead named his insecticide Rentokil, starting up his own business the following year under the same name. Rentokil began offering its own extermination services during World War II, with a focus on termite and dry rot control.

Production of Ratin was phased out during the mid-1950s as the product was replaced by new preparations. The end of Ratin production led British Ratin to change its name, taking on that of Rentokil instead. Sophus Berendsen remained that company’s largest shareholder, a position it was to enjoy until the mid-1990s. Yet in 1969, Sophus Berendsen, which itself remained a private company, brought its Rentokil subsidiary to the stock market with a listing on the London Stock Exchange. The Danish company maintained a stake of more than 50 percent in Rentokil; yet its investment position soon evolved to that of a purely financial holding, as Rentokil pursued its own development as an autonomous company.

Shift to Services for a New Century

Berendsen’s oversight of Rentokil had by then given it a taste for the services sector. In 1973, the company took its first step into that area, launching a textile services division. At the same time, the company went public, with a listing on the Copenhagen stock exchange. Despite the growth of that division, Berendsen maintained its longstanding commitment to the industrial import market. In 1978, in fact, Berendsen launched a new division, that of Power & Motion Control products. During the 1980s, the distribution of industrial products became Berendsen’s primary import focus, and in 1984, the company phased out its steel and glass imports business. That line was replaced the same year with the launch of a new Components division, which was dedicated to the sale and distribution of electronic and related components.

Company Perspectives

Business concept: Berendsen develops and provides value added textile, hygiene and safety solutions. These are aimed at industry, the service sector, hotels, restaurants, hospitals, nursing homes and public institutions. Our aim is to deliver comfort, hygiene and safety to our customers. We wish to add positively to their image, and to give them a better overall financial position through our services. As soon as Berendsen assumes responsibility for handling a customer’s textiles, the customer is able to free up time, space, staff and capital. These are resources that can be put to better use in the customer’s own business. We call this ‘Total Economy’. Vision: Through innovation and customer relations we will strive to be the leading textile service company in Europe developing future solutions that benefit our customers, employees and shareholders.

Into the 1990s, Berendsen continued to operate in two primary areas, industrial distribution and textile services. At the start of that decade, Berendsen went on a growth drive, with a particular emphasis on international expansion. In 1991, the company took its textile services operations beyond Denmark when it acquired the Electrolux companies based in Sweden and The Netherlands. The company also took over the textile services division of fellow Danish company ISS. Two years later, the company scored an even bigger coup when its Power & Motion Control subsidiary bought up Lucas Fluid Power, based in the United States and Australia, making Berendsen the world leader in that segment. By then, Berendsen also had begun exploring entry into the textile services sector in the newly opening Eastern European market, establishing its first plant in Poland in 1995.

Berendsen’s blossoming interests in textile services, which led it to complete a number of small acquisitions through the second half of the 1990s, led it to begin phasing out its holding in its Rentokil subsidiary, which by then had grown into one of the U.K.’s leading business-to-business services companies with interests extending beyond its pest control origins to embrace such diverse interests as security and guard services; parcel delivery services; plant rentals; office machinery and equipment maintenance; office cleaning services; and healthcare, including washroom services. Led by Clive Thompson since the early 1980s, Rentokil had made more than 300 acquisitions by the mid-1990s, posting annual sales gains of 20 percent.

In 1996, Rentokil’s latest and largest acquisition gave Sophus Berendsen an opportunity to begin cashing out its holding in order to finance the growth of its own textile services wing. When Rentokil launched—and won—a £1.9 billion hostile takeover of BET, which held the Initial linen services company among others, Sophus Berendsen reduced its holding in Rentokil to just 36 percent. In support of the takeover, however, Sophus Berendsen pledged to maintain its interest in Rentokil for at least five more years.

Nonetheless, Berendsen began making preparation for its exit from its stake in Rentokil (renamed Rentokil Initial). In 1998, the company split itself into two companies, Sophus Berendsen A/S, which took over its Textile Services and Industrial Distribution wings, as well as a 10 percent stake in Rentokil Initial; and Ratin A/S, which existed solely as a holding corporation for the company’s remaining Rentokil Initial shares. That same year, Sophus Berendsen sold off its poorly performing Components division.

The arrival of CEO Henrik Brandt in 1999 signaled the start of a new era for Sophus Berendsen. The company’s Power & Motion Control division had been stumbling in the latter half of the decade, and Sophus Berendsen now announced its intention to sell off that part of the company and refocus itself wholly on its textile services business. The Power & Motion Control business was sold off in 2000.

Key Dates

1854:: Sophus Berendsen begins importing iron girders for the Danish market from England and Belgium, then adds glass imports.
1886:: Albert Berendsen takes over leadership of the company and expands into new import categories, such as materials for the shipbuilding and railroad industries.
1897:: The company is incorporated and Ludvig Elsass becomes managing director.
1906:: Sophus Berendsen acquires exclusive U.K. rights to Ratin, a rat and mice control product.
1912:: Sophus Berendsen adds new import products, including radar and navigation systems components.
1927:: Berendsen’s U.K. sales office is expanded into a full-fledged subsidiary, British Ratin, which transforms itself into a services company the following year.
1957:: British Ratin acquires Rentokil Ltd. and changes its name to Rentokil.
1969:: Berendsen forms Rentokil as a public company.
1973:: Berendsen lists on the Copenhagen stock exchange and begins textile services operations.
1978:: Berendsen creates the Power & Motor Control (PMC) division.
1984:: Company phases out its steel and glass imports business.
1991:: Company acquires two textile services companies in Sweden and The Netherlands from Electrolux as well as the textile services division of Denmark’s ISS.
1993:: PMC acquires Lucas Control, based in the United States and Australia.
1996:: Rentokil launches a hostile takeover of BET; Berendsen’s stake in Rentokil is reduced to 36 percent.
1997:: Company acquires Norway’s Lillehammer Vask & Rens, Sweden’s Norrbottens Läns, and Ster Super Service, based in The Netherlands, all textile services companies.
1998:: Company sells off its Component division and splits into two companies, Sophus Berendsen and Ratin A/S.
1999:: Company announces its intention to sell off its PMC companies and to become wholly focused on textile services; company acquires Lips Bedrijfsdiensten BV, of The Netherlands.
2000:: Company acquires Wäschegut Groawäscherei GmbH and Catrin Beteiligungsgesellschaft, both in Germany, and Voss Vaskeri A/S of Norway and De Lelie, in The Netherlands.
2001:: Berendsen sells off its remaining Rentokil shares and acquires I/S Korova in Denmark, Micronclean in The Netherlands, a clean room specialist, and Denmark’s RoBi group, a mat rentals and laundering concern.
2002:: Davis Service Group announces takeover offer worth more than $600 million; Berendsen acquires Mors Matteservice Aps, of Denmark and Hovo-de-Maas, a company specializing in workwear based in The Netherlands.

By 2001, Berendsen was ready to shed its holding in Rentokil Initial, selling off its shares, including selling Ratin A/S to Rentokil itself. The sale of its Rentokil shares—one of the fastest-growing British stocks of the 1990s—helped fund Berendsen’s own acquisition drive. Through the end of the decade and into the beginning of the new century, Berendsen added a number of companies, such as Norway’s Lillehammer Vask & Rens, Sweden’s Norrbottens Läns, and Ster Super Service, based in The Netherlands, all of which were acquired in 1997. After taking a break for the sale of the Components division and then the Power and Motion Control business, Berendsen returned to its acquisition drive in 1999, adding Lips Bedrijfsdiensten BV, of The Netherlands.

In 2000, Berendsen stepped up its European expansion with the purchase of Wäschegut Groβwäscherei GmbH, and of Catrin Beteiligungsgesellschaft, both in Germany. The company acquired Voss Vaskeri A/S of Norway that year, and then purchased De Lelie, in The Netherlands. Through 2001, as the company completed the sale of its Rentokil shares, Berendsen continued its shopping spree, buying up I/S Korova in Denmark, Micronclean in The Netherlands, a clean room specialist, and Denmark’s RoBi group, specializing in mat rentals and laundering. The company continued its acquisition drive into 2002, buying up Mors Matteservice Aps, of Denmark, in April, and purchasing Hovo-de-Maas, a company specializing in workwear based in The Netherlands, in June of that year.

Yet, at the beginning of 2001, Berendsen, calling for the consolidation of Europe’s textile services market, let it be known that it was willing to entertain acquisition proposals. The company did not have to wait long—in February 2002, fellow Danish services company ISS, which had sold its textile services operations to Berendsen at the beginning of the 1990s and had since used Berendsen as a main subcontractor, announced that it had acquired 10 percent of Berendsen’s shares and was interested in acquiring the rest of the company.

Yet, before ISS could complete a formal takeover offer, Berendsen found itself with a new suitor, the United Kingdom’s Davis Service Group, with a takeover offer valued at more than $600 million, representing a price some 50 percent more than Berendsen’s market value. The purchase of Berendsen by Davis was completed in the summer of 2002, creating Europe’s leading textile services company.

Principal Subsidiaries

Berendsen Têxtil Service A/S; AS Svarmil Ltd. (Estonia); Berendsen GmbH (Germany); Berendsen Textiel Service B.V. (Netherlands); Berendsen Tekstil Service AS (Norway); Berendsen Textile Service Sp. z.o.o. (Poland); Berendsen Textile Service AB (Sweden); Berendsen Safety AB (Sweden).

Principal Competitors

ISS (International Service System A/S); Rentokil Initial plc; Bidvest Group Ltd.; Cintas Corp.; Overall Laundry Services Inc.; Aramark Uniform Services Inc.; Spotless Services Ltd.; Steiner Corp.; Davis Service Group Plc; G and K Services Inc.; Ameripride Services Inc.; Johnson Service Group Plc.