Pakhoed and Van Ommeren to relaunch merger in Vopak
Worldwide reorganisation in chemicals and oil calls for accelerated growth and a wider range of logistical services
Rotterdam, 5 July 1999. Royal Pakhoed and Royal Van Ommeren announce that the expectation is justified that agreement will be reached on a merger between the two companies on equal terms. More specific requirements of the chemical and oil industries in the field of global outsourcing and supply chain management form the main motive for bridging the previous differences of opinion on strategy and on compliance with the requirements of the European Commission. The parties expect to effectuate the merger in October.
The new combination will play a leading role in the overall flow of chemicals and oil products from source to end user by its:
global network of tank terminals
fleet of tankers, coasters, inland tankers and tank containers
Chemical Distribution activities in North America and Europe
support services such as shipping agencies, forwarding agents and distribution centers.
The added value of the combination derives from the bundling of knowledge and systems as well as from optimal use of its assets. This will provide a platform for continued strong growth. The new company will be named Vopak.
The SER Merger Commission and the trade unions concerned have been informed of the plans. The Central Works Councils of Pakhoed and Van Ommeren have likewise been informed, as well as the European Commission in Brussels.
New approach
Market developments in the chemical and oil industries are leading to further consolidation and increased outsourcing of the full package of logistical services and distribution from producer to end user. This industry trend also calls for one top quality service provider, which necessitates expansion of scale. The scale of operations also offers possibilities for reducing costs through integration and becoming a low cost service provider. This made the two chairmen, Westdijk and Van den Driest, reopen the merger talks very recently. Contrary to an approach based on a functional line (Distribution, Tank Storage and Shipping), parties have now opted for a market-driven approach along the lines of Chemicals and Oil & Gas.
In Chemicals, Vopak aims to be the preferred link worldwide between chemicals producers and end users, not only as logistical service provider but also as distributor. To achieve this, the combination has unique know-how in dealing with chemicals and a relations network of a thousand producers on the one hand and over 250,000 customers on the other. Providing integrated services will result in higher and more stable sales and enhance Vopak’s attractiveness as logistical partner and distributor.
In Oil (both mineral and vegetable) & Gas, Vopak will be able to anticipate the industry trend for transferring the management and/or ownership of infrastructure (such as terminals and pipelines) and distribution. Vopak will also deploy its tank terminals, ocean shipping and inland tanker barges to supply integrated logistical services.
Strategic targets
Priority for safety, health and environment at the highest level;
Low cost provider of logistical services and knowledge management;
Selective expansion of the logistics network to support integrated logistical services, not necessarily based on own assets;
Expansion of the chemical distribution network in terms of geographical spread and product groups, and further improvement of returns by optimization.
Financial targets
The introduction of value based management methology in evaluating business performance and new investments;
Increase in logistics turnover by 5-10% a year through organic growth, grassroot projects, participations and selective acquisitions;
Increase in chemical distribution turnover by an average of 5% a year through organic growth and potentially double its volume within 3-5 years through acquisitions;
Generating financing capacity of at least EUR 1 billion available within the balance sheet, free cash flows and divestments;
16% return on capital employed, including goodwill, within three years.
Management and organization
Vopak will operate in three areas worldwide:
Chemical Logistics
Chemical Distribution
Oil (mineral and vegetable) & Gas Logistics
This structure, together with the principles of equality and management renewal, has resulted in the following composition of the Executive Board:
A.H. Spoor – chairman, Chemical Distribution Europe and IT
R.R. Hendriks – vice chairman, Chemical Distribution North America and Finance
H.C. van Westenbrugge – Oil & Gas Logistics and Shipping Agencies
N.J.A. von Hombracht – Chemical Logistics
Mr N.J. Westdijk and Mr C.J. van den Driest, chairmen of the Executive Boards of Pakhoed and Van Ommeren respectively, have been at the helm of their companies for a long time and jointly launched this merger. Both have decided to make way for a new Executive Board. Mr G.P. Krans, currently member of the Executive Board of Pakhoed, has decided to seek a position elsewhere.
The Supervisory Board will consist of ten members, five from each company. The new Supervisory Board will be chaired by Mr D.R. de Kat, who is currently a member of the Supervisory Board of Van Ommeren. Several committees will be formed within the Supervisory Board, among which an Audit Committee and an Integration Committee which will advise the Executive Board in the initial phase of the integration of the two companies.
With the effectuation of the merger, both corporate offices will be combined, which will result in job losses. Forced dismissals will be avoided with the help of a mobility agency. The intention is to seek a new corporate office location in Rotterdam.
Our customers’ demand for more integrated logistical services worldwide calls for a different approach to the market. This will have direct effect on the organizational structure to be adopted, which will be developed in more detail in the fall of this year.
Conditions for the merger
Pakhoed and Van Ommeren will be combined in a legal merger. They will merge in a public limited liability company, based on the following principles:
holders of depositary receipts for Pakhoed shares will receive one (1.0) share in Vopak for each depositary receipt;
holders of depositary receipts for Van Ommeren shares will receive 1.34 shares in Vopak for each depositary receipt;
on the basis of this proposed exchange rate, the Pakhoed shareholders will acquire 63.4% and the Van Ommeren shareholders 36.6% of Vopak’s ordinary share capital;
the holders of depositary receipts for Van Ommeren shares will continue to be entitled to the 1999 interim cash dividend;
current holders of depositary receipts for cumulative Pakhoed financing preference shares will be given an opportunity to acquire a 5% interest in Vopak’s share capital.
European Commission
The Merger Task Force of the European Commission in Brussels has been informed of the plans. In order to safeguard sufficient competition, Vopak proposes to divest a substantial portion of its interests in the Rotterdam and Antwerp terminals, as follows:
1. Paktank Botlek – 1,549,000 cbm chemicals and mineral oil storage
2. Paktank Pernis – 350,000 cbm vegetable oil storage
3. 50% interest held by
Van Ommeren in
Gamatex, Antwerp – 486,000 cbm chemicals, mineral oil and gas storage
Pakhoed and Van Ommeren are confident that the European Commission will not take long to reach a decision, given the previous exchange of information in 1998.
As part of Pakhoed’s strategy, negotiations on the disposal of its Pernis terminal and its two terminals in Nijmegen had already been launched previously. These negotiations are expected to be successfully completed in the near future.
Corporate Governance
Vopak’s articles of association will provide for a “full structure regime” (volledig structuurregime). The holders of depositary receipts for Pakhoed and Van Ommeren shares will receive shares with full voting rights in Vopak. In addition, the option of issuing preference shares will be retained.
The new combination
For 1998, Vopak realised pro forma sales of EUR 3.3 billion and an operating profit of EUR 302 million. A provision of EUR 75 million gross will be formed for reorganizations and merger costs, while direct annual cost savings will amount to EUR 50 millions gross, to be achieved over a period of three years.
Vopak will employ a workforce of more than 9,500 worldwide.
Key figures based on the 1998 financial year:
(in EUR millions)
Pakhoed Van Ommeren Combined
(pro forma)
net turnover 3,006 344 3,350
operating profit 194 108 302
net profit 103 68 171
shareholders’ equity 454 330 784
risk capital
522
371
893
total assets
1,843
1,012
2,855
cash flow
167 113 280
Half-year figures
The half-year figures of Royal Pakhoed and Royal Van Ommeren will be published on 11 and 19 August 1999 respectively.
Profile
Pakhoed is the world’s largest distributor of chemical products, with distribution centres in 37 locations in Europe and 130 in North America. In tank storage, Pakhoed has 37 tank terminals in Europe, North America and Asia, with a total capacity of over 16 million cbm (including joint ventures). In addition, Pakhoed has a fleet of 13 chemicals tankers, 17 inland tankers, 7 bitumen coasters and a shipping agency business with locations in Western Europe.
Van Ommeren’s network comprises 55 tank terminals with total capacity of over 15 million cbm (including joint ventures), spread over five continents. Ocean tanker activities are bundled in Broström Van Ommeren Shipping AB (Brovo), in which Van Ommeren has a 50% interest and which operates 51 tankers. Additionally, Van Ommeren operates a short-sea and inland shipping fleet of 137 tankers, tank containers and has a global network of agencies and forwarding offices.
For further information:
Pakhoed
F.D. de Meester telephone : +31 (0)10 400 2120
e-mail : [email protected]
Mrs A.J. v.d. Vlugt telephone : +31 (0)10 400 2647
e-mail : [email protected]
Van Ommeren
Mrs J. Eikenaar telephone : +31 (0)10 464 2616
e-mail : [email protected]
