Sanitec Corporation History

Company Perspectives:

Sanitec's vision is to become a global supplier in bathroom solutions. The company's core purpose is to contribute to the health and well-being of people by providing them with well-designed and ecologically justified bathroom solutions.

Key Dates:

1873:

Arabia porcelain factory is established in Helsinki to produce sanitary fixtures.

1947:

Wartsilä takes over Arabia's porcelain operations.

1969:

Wartsilä builds a new factory in Tammisaari, forming the new company Wartsilä Tammisaaren Posliini.

1975:

Wartsilä and Ifö Sanitär create joint-venture development company, EVAK.

1979:

The company launches EVAC vacuum sewage operations.

1981:

Wartsilä acquires Ifö Sanitär.

1985:

The company acquires vacuum sewage systems operations from Electrolux and launches EVAC brand name.

1986:

Wartsilä acquires Norway's Porsgrund ceramics operations.

1990:

Wartsilä Tammisaaren Posliini, EVAC, Porsgrund and Ifo are bundled into a new company, Sanitec.

1991:

Wartsilä and Lohfa merge as Metra; Sanitec is spun off as a separate subsidiary and begins acquisition drive.

1999:

Sanitec goes public on the Helsinki Stock Exchange.

2001:

BC Partners acquires Sanitec, and the company is delisted from the Helsinki Stock Exchange.

Company History:

Sanitec Corporation is Europe's leading manufacturer of bathroom ceramics and bath and shower fittings and products. Through its subsidiary Evac International, the company is also the world's leading manufacturer of sewage vacuum systems for boats, trains, aircraft, and buildings. Based in Helsinki, Finland, Sanitec operates primarily through its strong portfolio of brand names, most of which are local market leaders. Sanitec's brands include IDO Bathroom, in Finland; Ifö Sanitär, in Sweden; Allia, in France; Pozzi-Ginori and Domino, which also produces the Albatros and Revita brands, in Italy; Twyford, including the Doulton and Royal Doulton brands, in the United Kingdom; Sphinx, from the Netherlands; Keramag and Koralle, in Germany; Kolo, in Poland; and Lecico, in Egypt. While many of these brands focus largely on their local markets, a number of Sanitec's brands are among Europe's leaders, such as Koralle, which distributes its products throughout much of western and eastern Europe. Bathroom Ceramics is the company's largest business area, accounting for more than 61 percent of Sanitec's 2001 sales of EUR 994.6 million. Bath and Shower Products add nearly 30 percent of the company's revenues. The company's Evac International subsidiary is the only manufacturer in its market supplying to the four major markets of marine, aviation, train, and building sewerage vacuum systems, and represented almost 9 percent of Sanitec's sales in 2001. In that year, Sanitec agreed to be acquired by investment fund group BC Partners, which subsequently delisted the company from the Helsinki Stock Exchange. The company intends to extend its presence globally before returning to the stock market. Sanitec is led by chairman Berndt Brunow and president and CEO Rainser Simon.

Finnish Porcelain Origins in the 19th Century

Sanitec was formed in 1990 when Finnish industrial conglomerate Wartsilä, founded in 1926, grouped together several subsidiaries, all involved in the production of fittings for bathrooms. The following year, when Wartsilä merged with another Finnish conglomerate, becoming known as Metra, Sanitec was spun off as a separate company owned by Metra. The centerpiece of the new Sanitec was the then-named Wartsilä Tammisaaren Posliini, which was renamed IDO Tammisaaren Posliini in 1991, then changed its name again, to IDO Kylpyhuone, or IDO Bathroom. That company's roots traced back to the beginnings of the Finnish ceramics and porcelain industry in the late 1800s.

The first porcelain factory was established in Helsinki in 1878 and became known worldwide for the Arabia brand of porcelain table services and other household ornaments and items. During the 1870s, the Helsinki factory added production of toilets and other items for household sanitary needs. The company also produced sanitary goods for hospitals.

Wartsilä took control of Arabia in 1947. In 1969, the conglomerate transferred most of Arabia's bathroom, shower, and sanitary production to a new, automated facility in Tammisaari, Finland. A new company was established for these operations, called Wartsilä Tammisaaren Posliini. By 1971, the Tammisaari subsidiary had taken over all of Wartsilä's sanitary production activities.

Wartsilä began building up other interests related to the bathroom market in the 1970s, notably with the launch of EVAK Development Project in 1975, a joint venture between Wartsilä Tammisaaren Posliini and Sweden's Ifö Sanitär's Vacuum Systems group. Established in 1887, Ifö Sanitär had captured a leading share of much of the Scandinavian market for sanitary fittings for the bathroom and the kitchen. The partnership with Ifö led to the creation of a full-fledged joint venture company in 1979. Then, in 1982, Wartsilä acquired Ifö Sanitär and full-control of the EVAK joint venture.

During the 1980s, Wartsilä made several more acquisitions involving its sanitary products holdings. The EVAC subsidiary was expanded in 1986 with the purchase of Electrolux's vacuum sewage operations, including subsidiary Envirovac Inc. It was at this time that EVAC adopted the EVAC brand name. Another acquisition came in 1986 with the purchase of sanitary business Porsgrund, of Norway, which had started as a porcelain maker in 1885.

As formed in 1990, Sanitec consisted of IDO, Ifö Sanitär, Porsgrund, and EVAC, and started operations as a leading player in the Scandinavian market. The company then set out to extend its leadership position across Europe. In order to achieve this, Sanitec sought to extend its organic growth with a series of targeted acquisitions through the 1990s.

Acquiring Scale in the 1990s

Sanitec's first major acquisitions came in 1991. In that year, the company picked up Keramag, of Germany. Founded near Düsseldorf in 1903, Keramag had grown to become the leader in Germany in the bathroom ceramics sector. That purchase was accompanied by the acquisition of France's Allia. That company's origins extended back to 1892, when the Lyon-based Compagnie des Cornues et Produits Ceramiques began production of ceramic sanitary fixtures. By 1917, that activity had grown to the extent that the company built a dedicated production facility for its sanitary fixtures in Digoin. Originally specialized in porcelain, Allia later acquired production in other materials, adding a factory in Limoges and then its Polyroc facility in Vendôme, which enabled the company to begin marketing complete bathrooms. By the beginning of the 1990s, Allia had become a leading brand name in the French market.

The addition of Keramag and Allia raised Sanitec's revenues to the equivalent of nearly EUR 275 million. The company next turned to Poland in 1993, acquiring Kolo, a sanitary ceramics specialist founded in 1962. Sanitec then moved to Italy, acquiring another leading brand name, Pozzi-Ginori. Founded in 1735 in Doccia by the Marquis Ginori, the company had merged with Milan's Richard in 1896, becoming Richard-Ginori. In 1956, the company moved its production to Livorno. In 1973, Richard-Ginori merged with another Italian sanitary producer, Pozzi Spa, changing its name to Pozzi-Giorno. The purchase of that company not only helped Sanitec extend its reach into southern Europe, it also helped to boost the company's sales--by the end of 1994, Sanitec's revenues had swelled past EUR 430 million.

By then, Sanitec, through Allia, had acquired another French sanitary ceramics manufacturer, FAS, based in Avranches, boosting Allia to the market leadership in that country. Sanitec continued building on its position in that country, acquiring majority control of Varicor in 1995. That year also saw the acquisition of Poland's Laminex, which specialized in manufacturing acrylic bathtubs. Sanitec also took a 25 percent share in Italian company Domino Spa. Founded in 1982, Domino, originally called Albatros System, had risen quickly in Italy, especially after the launch of the successful Revita brand name. By 1993, Albatros changed its name to Domino, while continuing to distribute its products under its two strong brand names, Albatros and Revita. After Sanitec took over Domino completely in 1998, the company began distributing the Albatros and Revita brands through other parts of its growing European network.

Sanitec was by then a thoroughly international company--more than 96 percent of its sales were from outside of Finland. The company, which already operated worldwide through its EVAC vacuum sewage subsidiary, had successfully expanded throughout much of Europe. In 1997, the company had further broadened its reach when it acquired a 50 percent stake in Lecico. Founded with the assistance of Keramag outside of Beirut in 1959, Lecico had long been the only producer of ceramic sanitary products in Lebanon. In 1975, the company had set up a subsidiary in Egypt, starting sanitary product production in 1978 and adding a second facility for producing ceramic wall tiles in 1983. Following Sanitec's acquisition of 50 percent of the company, Lecico headquarters moved to its Alexandria, Egypt, facility while production at the Lebanon plant continued.

After acquiring Germany's Sanivac, through EVAC, in 1998, Sanitec took control of Johnson Suisse, operating in Malaysia, giving the company a platform for distribution throughout the Asian markets. EVAC grew again the following year with the purchase of Germany's Aquamar, a producer of biologically based sewage treatment plants used in the marine and building sectors.

Sanitec also extended its larger sanitary operations, buying up Koralle, of Germany, which had been founded in 1970 and had built up a strong brand name as a high-end designer and producer of bathroom and other sanitary fixtures, with sales throughout most of Europe. Nonetheless, Sanitec found itself in a battle to maintain its European market lead at the end of the 1990s, as the sanitary products giant American Standard had begun its own acquisition drive in Europe. By mid-1999, however, Sanitec solidified its lead with the announcement of it acquisition of Koninklijke Sphinx, of the Netherlands.

Sphinx's origins reached back to the founding of the Dutch ceramics industry in Maastricht in the 1830s by Petrus Regout. By the 1860s, the Maastricht ceramics community was flourishing; among the new companies joining the Regout works was Société Céramique, formed in 1863 from a merger of two existing companies. Sphinx and Société Céramique then merged nearly a century later, in 1959. Throughout its history, Sphinx had been noted for its porcelain table service and decoration, while also building up a line of sanitary fittings. At the end of 1960s, Sphinx had decided to focus solely on its sanitary production. By the 1990s, the company had grown to become the market leader in the Netherlands, with a strong position in Germany; the company had also become one of the largest sanitary producers in Scandinavia through its subsidiary Gustavsberg.

Sanitec went public in 1999, placing its shares on the Helsinki stock exchange, in part to fund its acquisition of the Dutch company. Yet the purchase was not to be completed until 2000, after Sanitec addressed European Mergers and Monopolies Commission concerns by agreeing to sell off a number of its holdings, including the Gustavsberg operations. The addition of Sphinx helped raised Sanitec's sales to EUR 877 million and helped complete much of its coverage of western Europe. Sphinx, which operated sales offices in the United Kingdom, also gave Sanitec an entry into that county, which had long represented a gap in Sanitec's holdings.

Sanitec continued to look for acquisitions, and in 2001 announced its purchase of UK market leader Caradon Bathrooms--part of the Caradon Plumbing group--and its brands Twyford and Doulton. That company's history stretched back as far as the seventeenth century, when Joshua Twyford set up commercial pottery workshop in Hanley in 1680. Twyford's descendant, Thomas Twyford, set up the modern business with the construction of two factories producing sanitary fixtures, such as wash basins, in 1849. Twyford later became part of Reed International's building products operations in the 1970s, then of Caradon in the 1980s, where it was joined by another strong bathroom products brand, Doulton, founded in 1815. The acquisition of Caradon Bathrooms--which was renamed Twyford Bathroom, helped complete Sanitec's European coverage with more than 20 percent of the UK bathroom fittings market. It was also expected to help boost the company's revenues well beyond the EUR 1 billion market by the end of 2002.

Sanitec's stint as a public company did not last for long. In 2001, Wartsilä, which continued to hold about 50 percent of Sanitec, led a group of investors, worth more than 60 percent of Sanitec's shares, to an agreement to sell Sanitec to investment fund specialist BC Partners. By the end of 2001, BC Partners, which specialized in large-scale public-to-private buyouts, had completed its acquisition of Sanitec, acquiring 100 percent of the company's shares and delisting it from the Helsinki stock exchange. The acquisition, however, quickly revealed itself to be the first step in the next phase of Sanitec's growth, as the company's new owners expressed their intent to expand Sanitec's leadership worldwide.

Principal Subsidiaries: Allia S.A. (France); Domino S.p.A. (Italy); Evac International Ltd; Ido Bathroom Ltd; Ifö Sanitär AB (Sweden); Keramag AG (Germany); Koralle Sanitärprodukte GmbH (Germany); Lecico Egypt S.A.E; Pozzi-Ginori S.p.A. (Italy); Sanitec Kolo Sp. Z o.o. (Poland); Koninklijke Sphinx B.V.(The Netherlands); Twyford Bathrooms Ltd (U.K.).

Principal Competitors: Tostem Inax Holding Corp; TOTO Ltd.; Kohler Co.; Air Water Inc.; Takara Standard Co Ltd.; Uralita SA; Villeroy und Boch AG; USI Plumbing Products; Cleanup Corp.; Geberit International AG; Compania Roca Radiadores SA; Keramik Holding AG; Elkay Manufacturing Co.; Coop Costruttori Scarl; Ideal Standard SpA; Homeform Group.

Further Reading:

• Archer, John, "Wartsilä Will Use Sanitec Gain to Boost Core Unit," Reuters, April 26, 2001.
• ------, "Sanitec Says to Regain Europe Lead on Sphinx Buy," Reuters, June 3, 1999.
• "BC Partners Buys Sanitec in 908 Mln Euros Deal," Reuters, April 26, 2001.
• "Caradon Bathrooms Go to Sanitec," European Venture Capital Journal, February 2001, p.30.
• "Sanitary Ware: Sanitec's Acquisition of Sphinx Cleared with Conditions," European Report, December 4, 1999.
• "Sanitec Buys Caradon to Become Europe's Largest Bathroom Ceramics Supplier," Helsingin Sanomat, December 1, 2001.

Source: International Directory of Company Histories, Vol. 51. St. James Press, 2003.

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