BPB plc

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BPB plc

Park House
15 Bath Road
Slough,
United Kingdom
Telephone: (+ 44) 01753 898800
Fax: (+ 44) 01753 898888
Web site: http://www.bpb.com

Wholly Owned Subsidiary of Saint Gobain
Incorporated: 1917 as British Plaster Board
Employees: 12,907
Sales: £2.6 billion ($4.45 billion) (2005)
NAIC: 327420 Gypsum and Gypsum Product Manufacturing

BPB plc is the world's leading manufacturer of plasterboard (also known as wallboard or drywall) and gypsum plasters. The company is also a major producer of expanded polystyrene insulation materials and ceiling tiles, as well as other interior fittings for the building and construction industries. Present in more than 50 countries worldwide, BPB produces and sells more than 1.2 billion square meters of plasterboard each year at more than 130 production plants. This product category also remains the group's largest sales segment, representing 65 percent of BPB sales of £2.6 billion ($4.45 billion) in 2005. The company remains the leading plasterboard maker in the United Kingdom, where it used to hold the monopoly on the market; and is also number one in Europe. The European market remains the group's largest area of operation, accounting for 70 percent of total sales. In North America, which adds 20 percent to group sales, BPB is the third largest plasterboard manufacturer. Plaster, primarily based on synthetic gypsum produced as a byproduct of power generation operations, represents an additional 16 percent of company revenues. Other building materials fill the remaining 19 percent of BPB's annual sales. Formerly a public company, BPB's stock was delisted after France's Saint Gobain completed a hostile takeover of the group in late 2005.

U.K. WALLBOARD PIONEER
BETWEEN THE WORLD WARS

Plaster, produced by heating gypsum, or hydrated calcium sulfate, until the water evaporated, developed into a mainstay in the construction industry through the 19th century. By the end of the century, "wet-plastered" walls had become a standard feature of homes in the United Kingdom and elsewhere. While quarrying of gypsum took place in Britain, much of the country's plaster needs relied on imported gypsum. This situation began to change with the founding of the United Kingdom's first gypsum mine by Thomas McGhie in 1906, in order to exploit the mineral rich Cumbria region. McGhie also built a plaster mill onsite. In 1911, a number of other gypsum producers in the Cumbria region merged together, forming the Carlisle Plaster and Cement Co., which subsequently became part of the Gotham Company in 1916.

In the United States, in the meantime, the wet plaster market had been steadily losing ground to another gypsum-based material, called plasterboard. Invented by Augustino Sackett in the United States in 1888, plasterboard, also known as drywall or wallboard, offered a number of advantages over wet plaster. Drywall was not only faster to install, since no drying time was required, it also required few skills to install, making it a less expensive alternative. Nonetheless, drywall remained unknown in the United Kingdom until World War I.

Toward the end of the war, a new company was launched in order to introduce plasterboard to the U.K. market. The company, called British Plaster Board Ltd. and incorporated in 1917, started operations from a factory in Wallasey. The company met with a great deal of initial resistance, and particularly from the construction unions, and for some time suffered from the perception that plasterboard was an inferior substitute for traditional wet plaster. As a result, British Plaster remained unprofitable into the 1920s.

British Plaster continued to improve the quality of its products, however, launching a tradition as one of the global wallboard industry's leading innovators. By the 1920s, the company had not only succeeded in becoming profitable, it had also managed to overcome the initial negative perception of the product. Aiding the company was the boom in the U.K. housing market in the years following World War I. Builders quickly turned to the easier-to-install wallboard in order to satisfy the strong demand for new housing. The relative ease of installing a ceiling using wallboard over wet plaster played an important role in the product's acceptance on the market. This was especially true into the 1930s, as the U.K. market experienced a boom in speculative housing construction.

British Plaster went public in 1932 and entered a new phase of strong growth. A major factor in the company's expansion through the 1930s was its decision to take the production of both plaster and gypsum in-house. Where previously the company had relied especially on Thomas McGhie & Sons for its plaster needs, the company now built its own factory, at Erith, where it began producing plaster from gypsum imported from Nova Scotia. Into the middle of the 1930s, however, British Plaster moved to reduce its reliance on imported gypsum. The company began acquiring gypsum producers, as well as their plaster mills. In 1935 alone, the company acquired the Gotham Company, including the Carlisle Plaster and Cement Company, as well as Thomas McGhie and Long Meg Plaster Co., and The Gypsum Mines Ltd.

The difficult economic period played its role in British Plaster's expansion as well, as the cyclical nature of the construction market had left many of the gypsum and plaster suppliers in a fragile position. In 1936, British Plaster made a new acquisition, of Newark-based Cafferata & Co., which enabled the company to enter the specialist and industrial plaster market. Also that year, the company bought up JW Sheppard Ltd., based in Gotham, Peter Ford & Sons, and Marblaegis Ltd. British Plaster also took its first steps into the international market, buying up a stake in South Africa's Gypsum Industries Ltd. in 1936.

The 1930s also enabled British Plaster to consolidate its position in the plasterboard market. Stiff import duties had been imposed on the market starting in 1932, leading to the appearance of a number of competing plasterboard producers. Yet through the 1940s, British Plaster bought up many of its rivals. These included Pytho Plaster Board Co. Ltd., set up in Fauld in 1933 and acquired by British Plaster in 1936, and D. Anderson & Sons, established in 1938 and acquired by British Plaster the following year. In 1944, the company acquired another major competitor, Gyproc Products Ltd., founded in 1933. Like its other acquisitions, these companies continued to trade under their own names into the 1950s.

POST–WORLD WAR II U.K.
PLASTERBOARD POWERHOUSE

British Plaster's own investments during this period included the construction of a new plaster and plasterboard production facility near Carlisle, opened in 1937. By the end of World War II, the company had succeeded in capturing the largest part of the U.K. plasterboard market. The company also established itself as the dominant producer in the Irish market as well, following its 1947 acquisition of Gypsum Industries there. By the mid-1950s, British Plaster had nearly completed its monopoly of the British plasterboard market, after buying up one of only three remaining major competitors, Plaster Products. This purchase helped the company boost its share of the U.K. market to 78 percent by the end of the decade.

COMPANY PERSPECTIVES

We aim to be the preferred choice for interior building systems that provide innovative design solutions.

British Plaster began a period of restructuring in the 1950s. In 1954, the company adopted a new name, British Plaster Board (Holdings) Ltd., and created British Plaster Board (Manufacturing) as the subsidiary controlling its manufacturing operations. In 1962, the company decided to amalgamate all of its existing businesses under two separate banners, Gyproc, for its gypsum business, and British Plaster and Boards Ltd. By 1964, however, both of these subsidiaries were placed under a new entity, British Gypsum. The following year, the parent company changed its name again, to BPB Industries Ltd.

The company continued its momentum toward a monopoly position into the 1960s, when it bought Bellrock Gypsum Industries in 1967. Founded in 1947, Bellrock had emerged as a major competitor in 1957, when it bought up its own gypsum quarry. By the mid-1960s, Bellrock had succeeded in expanding its share of the U.K. market to 11 percent. Just one year after the Bellrock acquisition, British Plaster's monopoly of the U.K. plaster board sector was completed. In that year, industrial and chemicals conglomerate ICI, which had operated the country's second largest wallboard business, decided to exit the plasterboard market. ICI then gave its machinery to British Plaster, which expanded its production facility in Kirkby, then built a new factory at Sherburn, in order to meet the ever growing demand for plasterboard.

Throughout this period, BPB had operated British Gypsum and Bellrock as separate operations, in order to stimulate internal competition in the absence of a major external rival. The company abandoned this approach in 1970, however, merging all of its operations. These were then restructured instead into regional divisions, operated as separate profit centers within the organization.

NEW MARKETS FOR A NEW
CENTURY

With the U.K. market covered, BPB launched itself onto the international market in the second half of the 20th century. This process was strongly kicked off in 1952, with the purchase of French plasterboard leader Placoplatre SA. That purchase gave the company positions in Italy and Switzerland, in addition to a major share of the French market. The company continued to build its presence on the continent, notably through the acquisition of Italy's Perlite in 1954. In that year, also, BPB made its first move into the North American market, which was to remain the world's largest single plasterboard market into the next century, acquiring Westroc Industries Ltd. Elsewhere, the company added operations in Sweden, Denmark, the Netherlands, Greece, Belgium, and Germany. Through the 1980s, the company also added operations in Spain, in 1982, and in India, in 1986. The company's emergence as a European leader was further boosted in 1987, when it acquired Germany's Rigips GmbH, including its strong positions in Italy, Austria, and the Benelux markets. The company remained highly acquisitive through the 1980s and 1990s, adding acquisitions in Italy, Spain, the Netherlands, Belgium, and France, among others.

In addition to its domestic and international expansion, BPB had also moved to conquer new markets. Part of this effort came through the need to achieve greater vertical integration of its production. As such, the company added the production of paper, acquiring C. Davidson & Sons, in 1953. That purchase also gave the company control of Abertay Paper Sacks, then the world's largest producer of paper bags.

KEY DATES

1917:: British Plaster Board (BPB) launches drywall production at factory in Wallasey, England.
1932:: BPB goes public and launches acquisition drive, expanding into gypsum mining and plaster production through the end of the 1930s.
1952:: Company acquires Placoplatre in France as part of international expansion effort.
1965:: Company reincorporates as BPB Industries.
1968:: BPB becomes U.K. monopoly plasterboard supplier after takeover of remaining competitors' machinery.
1972:: Company acquires Blue Hawk to expand into retail do-it-yourself (DIY) market.
1987:: Company becomes European plasterboard leader with acquisition of Rigips, of Germany.
1999:: BPB expands Asian presence with majority control of Thai Gypsum.
2000:: Company acquires Celotex, becoming U.S. ceilings leader; becomes European expanded polystyrene insulation (EPS) leader with acquisitions of Heidelburger Dammsysteme, in Germany, and Isobox, in France.
2002:: BPB becomes global plasterboard leader with acquisition of James Hardie Limited's U.S. plasterboard unit.
2005:: Saint Gobain acquires BPB through hostile takeover.
2006:: BPB acquires El Tigre of Mexico and opens office in Saigon.

Into the mid-1960s, the company sought new markets within the construction industry as well. This led to the purchase of Artex Ltd., a leading manufacturer of decorative coatings, in 1966. Into the 1970s, BPB took the next step to vertical integration, acquiring U.K. do-it-yourself (DIY) retail specialist Blue Hawk in 1972. By the end of the decade, BPB had also begun to build up its expertise in the production of thermal and acoustic insulation products. The company's efforts in this direction focused especially on the market for expanded polystyrene insulation (EPS) materials.

Into the 2000s, BPB remained in an expansive mood. The company became a U.S. leader in the ceilings market through its purchase of Celotex in 2000. The company gained the leading share of the European EPS market that same year after acquiring both Heidelburger Dammsysteme, in Germany, and Isobox, in France. By then, the company had also moved to establish its presence in the booming Asian markets, acquiring majority control of Thai Gypsum in 1999. The 2001 acquisition of Rawlplug placed BPB at the top of the global fixings market. This was followed by the purchase of the U.S.-based plasterboard operations of James Hardie Industries, a purchase that raised BPB's plasterboard production past one billion square meters, establishing the company as the global leader.

By 2005, however, BPB's strong position had attracted the interest of French glass and building materials giant Saint Gobain. By the end of that year, Saint Gobain had launched a hostile takeover offer for BPB, placing the British company at the center of its own growth strategy into the end of the decade. The offer, which reached 775p per share, was finally accepted by BPB's shareholders at the end of 2005. The company was then delisted from the London Stock Exchange.

Despite the change in ownership, BPB showed no sign of slowing its expansion. By mid-2006, the company had completed its latest acquisition, of El Tigre, a plaster company based in Mexico. The company also moved to expand its presence in the Asian region, opening an office in Ho Chi Minh City in July 2006. BPB promised to remain the global plasterboard leader for the new century as well.

M. L. Cohen

PRINCIPAL SUBSIDIARIES

Artex; BPB America (U.S.A.); BPB Belgium; BPB Canada; BPB Hellas (Greece); BPB Italia (Italy); BPB Placo (France); BPB Placogips (Egypt); British Gypsum; Gypco Shanghai (China); Gyproc A/S (Denmark); Gyproc Oy (Finland); Placo Argentina; Placo Do Brasil (Brazil); Rigips Austria; Thai Gypsum (Thailand).

PRINCIPAL COMPETITORS

Lafarge S.A.; General Organization for Cement and Building Materials; HeidelbergCement AG; Georgia-Pacific Corp. Building Products Div.; The Siam Cement PCL; USG Corp.; Knauf Gips KG; Pacific Coast Building Products Inc.; Imerys; Rinker Group Ltd.; Grafton Group PLC; Promax S.A.