Worms et Cie

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Worms et Cie

55, rue de la Boetie
75008 Paris
France
(33) 1.44.13.38.00
Fax: (33) 1.44.13.38.83

Public Subsidiary of Someal
Incorporated: 1848
Employees: 33
Sales: FFr 1 billion (US$ 207.7 million) (1996)
Stock Exchanges: Paris
Ticker Symbol: Worms
SICs: 6719 Holding Companies, Not Elsewhere Classified

One of the most illustrious names in French financial history, Worms et Cie has functioned since the 1980s primarily as a holding company for various investments along two primary lines: insurance and industrial agrochemical, with an emphasis on paper and sugar production. In the late 1990s, however, Worms et Cie has undergone an important transition. After being attacked in a hostile takeover attempt by François Pinault, of the Artemis Group and Pinault-Printemps-Redoute, the formerly independent, family-controlled investment firm agreed to sell its Athena insurance subsidiary to Assurances Generales de France (AGF), a longtime investor and ally. At the same time, Worms et Cie agreed to be acquired—together with its remaining holdings, including its controlling shares of the Saint Louis industrial group and the Arjo Wiggins Appleton paper group—by Someal, an investment partnership controlled by another longtime Worms et Cie ally, the Agnelli family of Italy, via its Ifil investment vehicle. Someal is comprised of Ifil and members of the former shareholding group of Worms et Cie.

With an estimated worth of more than FFr 30 billion in 1998, Worms et Cie retains control of Saint Louis, the second largest sugar producer in France, as well as a controlling share of the Arjo Wiggins Appleton paper manufacturing group. Worms et Cie has not entirely abandoned its financial investment wing, retaining its control of the Permal Group, a New York-based investment fund management firm. The change in the structure of the company, which had been operated as a limited partnership—chiefly among Worms and related founding family shareholders—throughout the company’s 150-year history, marks a new era for the holding group. The company will also enter the year 2000 without a Worms family member at the helm; the last of the founding family directors, Nicholas Clive Worms, relinquished his active participation in Worms et Cie’s daily operations at the time of its acquisition by Someal. Longtime Worms et Cie director Dominique Auburtin remains the company’s chief executive.

The new Worms et Cie enters the liberty of the free market with an absence of debt, a war chest of some FFr 4 billion, and a strengthened management. With its focus no longer split between insurance and industry, Worms et Cie is expected to continue building its industrial portfolio.

Coal Beginning in the 19th Century

The acquisition of Worms et Cie by Someal marked the end of more than 150 years of active Worms family leadership in the company that bears its name. Although the family would come to represent the new French financial “nobility” in the 20th century, Worms et Cie had decidedly common origins. Born in 1801, Hypolite Worms, a wholesaler and shipping agent, opened an office in Paris in 1841. The end of the French monarchy, reestablished on the heels of the French revolution, was once again in the air, falling before the brief civil war of 1848. In that same year, Worms, together with a number of associates, the families of whom would remain shareholders in the company until the end of the 20th century, began importing English coal to France.

Worms and his associates reorganized the company, forming Worms et Cie, a limited partnership that remained in place until the mid-1990s. Among the features of this partnership was a pyramid-like structure of a small number of directors. For much of the company’s history, these directors were also among the company’s capitalists. As Worms et Cie diversified over the decades, individual directors typically became responsible for a particular branch of the company’s development. For much of the company’s history, however, a member of the Worms family provided the company’s leadership.

The end of the 1848 civil war led to the creation—and brief existence—of the Second Republic. One of the preoccupations of the new civil government was the rising rate of unemployment, particularly in the Parisian region, as the provincial population began a shift to the city center. The government created “national workshops” (ateliers nationaux) with the goal of providing work for the country’s unemployed. While this policy had the effect of attracting still more of the population to the capital city—and further exacerbating the unemployment problem—the availability of a cheap and abundant labor force and the rise in industrial activity came at the right time for Worms et Cie and its coal import business.

Worms et Cie prospered, and continued to see its fortunes—and financial influence—rise, even after the foundering of the Second Republic and the rise to power of Emperor Napoleon III in the formation of the Second Empire in 1852. Under Napoleon, the industrialization of France took on a new pace, fueling the demand for coal—and the growth of Worms et Cie. France’s increasingly international interests, in parallel with Napoleon Ill’s belligerence, led Worms et Cie to develop a new direction: that of shipping operations. Launched in 1856, the shipping wing of Worms et Cie soon became its principal activity and led the company to expand its operations on an international level.

The company’s first foreign office was opened in Port Saïd, Egypt, in 1869. The company’s operations soon spread throughout northern Africa, especially among France’s zone of colonial influence. By then Hypolite Worms was preparing to pass on the company’s leadership to the next generation, his nephew Henri Goudchaux. Under Goudchaux, Worms et Cie’s shipping empire took on an even greater influence, even as Napoleon Ill’s empire collapsed, replaced by the more durable Third Republic.

While coal-burning steam engines had provided the backbone of the Industrial Revolution, the end of the 19th century saw the emergence of a new type of engine requiring a new type of fuel source: petroleum. Worms et Cie adapted to the new market, expanding its trade activities to include the sale of petroleum, at first for Marcus Samuel & Co., beginning in 1892, and, starting in 1986, Shell of the Netherlands, with principal ports at Egypt, Marseilles, and the Sudan.

20th-century Industrial-Financiers

In the early years of the 20th century, a new Worms name joined the company’s group of directors: Hypolite Worms, born in 1889 and named for his grandfather, who had died in 1877. While Henri Goudchaux’s interest had focused on expanding Worms et Cie’s shipping activities, the younger Hypolite Worms was interested in bringing Worms et Cie beyond merchant activities and into the industrial and financial realms. A first step toward becoming one of France’s leading industrial concerns was the company’s move into shipbuilding. Encouraged by the French government, preoccupied with fighting World War I, Worms et Cie opened its shipyard near Le Havre in 1916, supplying merchant and other ships. Worms et Cie itself made use of its shipyards, building up a fleet of oceangoing vessels that led the company to create the Nouvelle Compagnie Havraise Pénninsulaire (NCHP), in 1934, launching the company in long-haul shipping.

Meanwhile, Hypolite Worms had brought the company’s growing influence to bear on the financial market in the postwar era. In 1928, Worms formed its Services Bancaires (banking services), which evolved into the Banque Worms in the 1960s. In the 1930s, Worms et Cie quickly became a prominent source of investment capital in France’s industrial landscape, including financing the creation of the national airline, Air France. On the industrial front, Worms et Cie opened a new subsidiary, Société Fran£aise de Transports Pétroliers, dedicated to oceangoing petroleum transportation.

Worms et Cie, which maintained close ties with England, continued operations through World War II, angering the Vichy French authorities; yet the refusal to interrupt its activities also brought the company into difficulties with the French justice system, eager to purge the country of its collaborationist taint, in the postwar years. The company was not, however, convicted of collaborationist activities, and the charges against it were dropped.

In the meantime, Hypolite Worms extended the company’s financial activities into the insurance industry, taking shares in companies La Préservatrice and La Foncière in 1949. Both companies were nearly as old as Worms et Cié. La Préservatrice had been founded in 1861 in Brussels, before becoming a French corporation in 1877, building up a network of 450 branch offices by the turn of the century. La Fonciére was founded in 1877, developing fire, transport, and life insurance activities, and worldwide operations by the turn of the century. Under Worms et Cie’s control, the two companies established the basis for the later formation of Athena Assurances, formed in’1989.

Evolving in the Postwar Era

Worms et Cie’s financial activities took on a greater importance for the company in the postwar years, as France’s economy boomed with the postwar reconstruction effort. In the 1950s, Worms et Cie began offering complete financing for the construction of factories located outside of France. Worms et Cie’s banking wing took on a new dimension with the establishment of the Banque Worms in the mid-1960s, which led to the company’s move into real estate leasing with the creation of a new subsidiary, Unibail, in 1968. While the company built its financial activities, it began to slow its industrial operations, closing its shipyard in 1966, and ending its Worms shipping line in 1968. The rest of the company’s maritime activities were brought under the umbrella group Compagnie Navale Worms in the early 1970s.

At the start of the 1970s, Worms et Cie took over Pechelbronn, a holding company which took on the role of an important investment vehicle for the firm, and was renamed as Worms et Cie during a company reorganization in 1991. The 1970s proved a quiet time for the company; while continuing its maritime activity, the company’s banking arm, and in particular Banque Worms, had become its central activity. The company’s industrial activity consisted chiefly of a series of investments, gaining shares in Saint Louis and Arjomari Prioux, but also in such names as Lancel and Dior, and in General Biscuit and Presses de la Cité. But Worms et Cie’s leadership was aging, and the company, which had grown to be identified with establishment France, was seen as slipping toward decline.

The nationalization of the Banque Worms by the French government provided something of a wake-up call for the company. Deprived of its central business, Worms et Cie recognized a need for a new generation of management—and the reappearance of a Worms at the company’s helm. Nicholas Clive Worms, born in 1942 and the sole male heir to the family fortune, had joined the family firm in 1970, but was not elevated to a director’s position until the early 1980s. Worms quickly surrounded himself with an able group of directors, notably Jean-Phillipe Thierry, leading the insurance wing, while turning his personal attention to the company’s industrial investments.

Under Nicholas Worms, the company moved towards a dual focus on insurance and industrial investments. After the loss of Banque Worms—which had its main branch in the company’s traditional headquarters—Worms et Cie quickly regrouped its financial activities into Banque Demachy, which became Demachy Worms et Cie at the end of the decade. Worms et Cie also maintained parts of its maritime operations through the 1990s—in 1986, Worms et Cie took over the former Elf subsidiary Compagnie Nationale de Navigation, which became the new name for the company’s ship-fittings operations. In the same period, Worms et Cie interrupted its shipping operations, selling off the Nouvelle Compagnie Havraise Péninsulaire. The company did not rebuild its shipping activity until the mid-1990s, taking over the management of Total’s petroleum transport fleet. This became something of a Worms et Cie specialty, especially with the partnership agreement reached with Compagnie Maritime Beige in 1995.

By the 1990s, however, the company’s insurance arm, Athena, had taken on the central role. Formed in 1989 with the merger of Worms et Cie’s Préservatrice Fonciére Assurances, with GPA Assurances (former Groupe des Populaires d’Assurances, and including Próxima, CGS, and Athena Banque), Athena reached FFr 18 billion in revenues by the mid-1990s. At the same time, Worms et Cie focused its industrial investments on two vehicles: the group Saint Louis, one of the France’s leading sugar producers and distributors, and the Arjo Wiggins Appleton paper manufacturing group. In each of these, Worms et Cie built controlling shareholder positions.

After nearly 150 years as a limited partnership, Worms et Cie, which by the 1990s counted nearly 100 partners among the heirs of the founding families, as well as investors among Italy’s Agnelli family, and others, reorganized as a public shareholding company in 1996. The change exposed the company to a hostile take over threat by Fraçois Pinault. One of France’s most successful entrepreneurs, Pinault had already built the distribution empire Pinault-Printemps-Redoute, grouping the famed department stores with the country’s leading catalog sales firm, as well as other retail activities, including the FNAC chain of book, music, computer, and stereo stores. However, Pinault was also president of Artemis, a fast-growing name in the country’s financial-insurance circles. Pinault saw an opening to add Athena to the Artemis portfolio, and rapidly built up a shareholding position in Worms et Cie.

Pinault struck in September 1997 with an offer of FFr 410 per share in cash, valuing Worms et Cie at some FFr 28 billion. Worms et Cie scrambled to shield itself from the hostile takeover attempt. By the beginning of October 1997, the company had found its white knights. Two of the Worms et Cie’s major shareholders and longtime investment allies—the insurance group AGF and the Agnelli family holding vehicle Ifil—responded to Pinault’s cash offer with a stock and cash offer worth FFr 465 per share. This offer, which raised Worms et Cie’s valuation to FFr 32 billion, took a two-pronged approach. The Athena insurance subsidiary was acquired by AGF, as part of its bid to strengthen its share of the French insurance market. Worms et Cie instead regrouped around its industrial investments, principally its control of Saint Louis and Arjo Wiggins, with a new owner: Someal, a holding company composed of the Worms family (28.2 percent), Ifil (56.5 percent), and AGF (15.3 percent).

The deal was accepted in December 1997, placing Worms et Cie out of reach of Pinault. But the deal also meant the end of active Worms family management in the firm, as Nicholas Clive Worms stepped aside to a board position, with leadership taken by Dominique Auburtin. In addition to the firm’s former industrial and maritime holdings, the new ownership also took on certain Ifil holdings, including its positions in the hotel and travel group Accor and the Agnelli family’s shares in Danone. With its focus on industrial investments, the “new” Worms et Cie was poised to continue its legacy as a pillar of French economic history.