Agfa Gevaert Group N.V.

1867–2002

One of the world's most renowned names in photographic films and equipment, Belgium-based Agfa Gevaert Group N.V. has been transforming itself into a high-end imaging solutions provider, with an emphasis on developing innovative and cutting-edge hardware, software, and other digital imaging products. These products make up a rising share of the group's sales, accounting for 37 percent of Agfa's total revenues of EUR 4.68 billion in 2002. Medical imaging is also an important part of Agfa's business, and the group is one of the world's largest producers of films, chemicals, software, and printing equipment for radiography and other medical imaging needs. Meanwhile, Agfa continues to produce its highly popular branded line of photographic film, paper, developing chemicals, and equipment for the photography, cinema, graphic arts, and design industries. Agfa has been restructuring its operations since 2001, creating three core business segments: Graphic Systems; Technical Imaging (comprising the Healthcare, Non-Destructive Testing, and Industrial Imaging business groups); and Consumer Imaging. Agfa's main manufacturing and research and development facilities are located at its headquarters in Mortsel, Belgium, and in Leverkusen, Germany, and Wilmington, Delaware, in the United States. The company operates subsidiaries and sales offices in more than 120 countries worldwide. Long held by Germany's Bayer, Agfa has been an independent company since 1999, listed on the Brussels stock exchange.

Photographic Pioneers in the 19th Century

Agfa-Gevaert Group's origins lay in the pioneering days of photography in Europe in the late 19th century. In Germany, a group of investors, including Carl Alexander von Martius and Paul Mendelssohn-Bartholdy (brother of composer Felix Mendelssohn) set up a factory for the production of color dyes. That company began operations in 1867 and went public in 1873, taking the name Aktien Gesellschaft fur Anilin-Fabrikation, or Agfa.

Agfa became one of Europe's pioneers in the newly emerging photography sector as well, and by 1888 the company had already begun producing its first photographic chemicals and equipment. An Agfa researcher developed a new photographic chemical, Rodinal, in 1891, which became an industry standard for black-and-white development, unrivaled throughout the next century. By 1897, Agfa had trademarked its name, which quickly became a reference in Europe for high-quality imaging products. This was especially so when Agfa began producing plates and film for the newly developing X-ray.

In Belgium, meanwhile, the photographer Lieven Gevaert had begun to produce his own photographic papers, setting up shop in Antwerp in 1890. In 1894, Gevaert incorporated his company as L. Gevaert & Cie, and began producing a wider range of photographic chemicals, papers, and equipment. In 1904, Gevaert moved to the town of Mortsel, and, with a full range of photographic equipment, supplies, and chemicals, as well as its own branded film rolls, the company changed its name to Gevaert Photo Producten in 1920.

Agfa struck again in 1998, this time buying the offset printing and graphic arts film operation from DuPont, adding some $600 million in sales.

1905–1972

Agfa expanded its own production in 1908 with the construction of a new film factory, at the time the largest in Europe. In 1905, the company had also joined a "community of interests" with two other rising German dye and chemicals companies, Bayer and BASF. By the end of World War I, as German chemicals companies scrambled to regain their international positions, the informal group moved toward a more formal structure. Under the leadership of Bayer Chairman Friedrich Carl Duisberg, Bayer, Agfa, BASF, together with chemical and dye companies Hoechst, Cassella, and Kalle, began merger negotiations that resulted in the creation of the infamous IG (Interessengemeinschaft) Farben in 1925. Under Farben, Agfa took over Bayer and other group members' photographic equipment and supplies activities.

Both Agfa and Gevaert remained at the forefront of the photographic and imaging industries. Agfa brought out its first film roll camera, the Billy, in 1928, while Gevaert launched its own x-ray films the following year. Innovation continued through the 1930s, especially with Agfa's 1936 launch of the first color films using the substractive color process.

IG Farben's involvement in the Nazi regime, especially in its development of the Zyklon B gas used in the Nazi death camps and its use of slave labor during the war, led to the group's dismantling following the war. The division of Germany between the Allied and Soviet governments severed Agfa from its main production site in Wolfen; instead, production of photographic materials resumed at the Bayer headquarters in Leverkusen in 1945. Agfa itself officially returned to business only in 1952, and became a wholly owned subsidiary of Bayer AG the following year. Over the next decade, Agfa continued its legacy of innovation, introducing the first fully automatic camera in 1956, and the first European color paper processing machine the same year. In 1959, Agfa also introduced the world's first fully automatic 35 mm camera.

European Photographic Giant in the 1960s

At the beginning of the 1960s, Agfa took over all of Bayer's photographic and imaging operations. Agfa then agreed to merge with Gevaert, forming Europe's largest photographic equipment and supplies company in 1964. Under terms of the merger, Bayer retained a 50 percent share of the new company, Agfa-Gevaert. During the 1970s, Agfa-Gevaert entered new categories, launching, for example, the first European-designed copy machine in 1972. At the same time, the company continued to develop its medical imaging interests. Yet heightened competition, notably from Japan's rising photographic industry stars, hit Agfa hard. By the beginning of the 1980s, the company was struggling, and Bayer took 100 percent control of Agfa-Gevaert.

1983–1998

Agfa-Gevaert remained one of the world's leading manufacturers of analog film technologies; during the 1980s, however, the company began making a name for itself as an innovative digital technologies group as well, releasing such products as the world's first digital LED printer in 1983 and a CCD flatbed scanner in 1985. The company also played a part in revolutionizing the film development industry with the launch of the first mini-lab in 1989.

By then, Agfa had raised its profile in the graphics industry with the acquisition of the United States' Compugraphic, a manufacturer of electronic pre-press equipment in 1988. Compugraphic's Wilmington, Delaware headquarters then became the home base for much of Agfa's American operations, renamed Agfa Corporation. That year, also, Agfa expanded its medical imaging division with the acquisition of another U.S. company, Matrix.

Bayer began a restructuring of its U.S. holdings in 1992, placing Agfa Corporation under its Pittsburgh-based Miles Inc. subsidiary, which itself took on the name of Bayer Corporation in 1995. Agfa then was refocused as Bayer's imaging division and underwent a restructuring that brought the struggling division back into profitability by the end of the decade.

International Digital Imaging Solutions Provider for the New Century

Agfa began acquiring new operations in the mid-1990s, purchasing Hoechst's printing plate and proofing equipment business Ozasol, with a manufacturing plant in Wiesbaden and sales of DM 420 million (approximately $200 million). The acquisition represented Agfa's largest to date. Agfa struck again in 1998, this time buying the offset printing and graphic arts film operation from DuPont, adding some $600 million in sales. After that acquisition, Agfa sold off its copy machine business to Lanier Worldwide. The following year, Agfa acquired another U.S. company, Sterling Diagnostic Imaging, expanding the company's medical imaging division.

1999–2004

With Agfa once again showing profits, Bayer decided the time was right to refocus its own operations, and in 1999 the company spun off 75 percent of Agfa in a public offering on both the Frankfurt and Euronext Brussels stock exchanges. The Agfa-Gevaert Group's headquarters then relocated to the company's Mortsel site, although its Leverkusen operation remained one of its primary manufacturing facilities. Bayer exited its holding in Agfa completely in 2002, selling its stake to Goldman Sachs.

The newly public and independent company returned to acquisitions in 2000, buying up Krautkramer, the world's leading manufacturer of NDT (non-destructive testing) systems. That year, the company also bought Quadrat, the number one developer of hardware and software for radiology systems.

These acquisitions forecasted a central component of the group's reorganization, launched in 2001. Designed to slash costs by more than EUR 400 million per year, the reorganization called for Agfa's transition toward becoming a digital imaging solutions specialist. As part of that effort, Agfa regrouped its operations under three primary business units: Graphic Systems; Technical Imaging (comprising the Healthcare, Non-Destructive Testing, and Industrial Imaging business groups); and Consumer Imaging. The company also began cutting away at its payroll, with job cuts slated ultimately to reach more than 4,000 of the group's 22,000 employees.

With the launch of its reorganization, the company embarked on a buying spree, picking up Autologic, Talk Technol-

By then, Agfa was well on its way to achieving the aims of its restructuring. Digital imaging sales represented a fast-rising proportion of the group's total sales, topping 37 percent of its nearly EUR 4.7 billion in revenues. With its restructuring scheduled for completion at the end of 2003, the company expected to start reaping the benefits as early as 2004. By refocusing its commitment onto the digital market, Agfa-Gevaert remained true to its long heritage as one of the world's leading and most innovative imaging specialists.