Royal Vopak to buy Ellis & Everard

By Staff -- Purchasing, 12/8/2000

In early November, Royal Vopak, the chemical distribution and logistics giant based in Rotterdam, The Netherlands, offered to purchase Ellis & Everard, based in the U.K., for approximately $443 million.

With regard to the $50-billion global chemical distribution market, the acquisition would boost Vopak's annual sales to an estimated $4 billion, which would account for about 8% market share.

Upon completion, the deal would greatly strengthen Vopak's already strong position in the U.S. chemical distribution market, boosting estimated annual sales in North America to about $2.7 billion. Van Waters & Rogers Inc., a Kirkland, Wash.-based wholly owned subsidiary of Vopak, is ranked number two in the U.S. distribution market behind Ashland Distribution Co., according to Purchasing Magazine's Top 100 Chemical Distributors annual rankings. Ellis & Everard was ranked number four by our survey, with U.S. sales of $900 million in 1999.

"Last year's annual sales for Van Waters & Rogers were $1.6 billion in the U.S.," says Ton Spoor, chief executive officer of Vopak. "With the acquisition of Ellis & Everard, our U.S. sales will grow to $2.5 billion, giving us about 13% of the U.S. market share," he says.

The primary benefit to both organizations from the merger is that geographically they complement one another with very little overlap. Spoor explains, "Historically, Ellis & Everard has had a strong presence in the Eastern U.S., especially the Northeast region," he says. Vopak has been relatively weak in its coverage of this area of the U.S. "The combination will give us strong representation throughout the country, and it will give us the opportunity to achieve cost synergies through a better logistics and distribution network," Spoor says.

The acquisition would also broaden Vopak's product portfolio by adding Ellis & Everard's polymers business to Van Waters & Rogers capabilities in the U.S.

According to Spoor, Vopak has already acquired about 30% of the shares of Ellis & Everard; in addition about 25% of the remaining shareholders have indicated their support for the acquisition. The offer is open until Dec. 1, 2000, at which time a meeting has been scheduled to determine the conditions of the deal, which will then be subject to the trade rules and regulations in the U.K.

Once Vopak has acquired the outstanding shares of Ellis & Everard and the merger is complete, the company plans to begin working collaboratively toward integration of the two companies' operations. Also, an expansion into the Latin American market is planned, Spoor says.