Buhrmann NV

1850–2000

Buhrmann NV is the world's largest business-to-business provider of office products, paper, and graphics systems. From its headquarters in Amsterdam, Buhrmann oversees a globally operating network with offices in 30 countries and 26,000 employees, generating sales of more than EUR 9.6 billion in 2000. Buhrmann, claiming market leadership positions in North America, Europe, and Australia and New Zealand, has grown especially through acquisitions. The purchase of Corporate Express, based in Colorado, in 1999, has helped the company double its total office products sales. At more than EUR 6 billion in annual sales, Office Products is the company's largest business segment, divided into three geographic divisions: OP North America, OP Europe, and OP Australia. Buhrmann has kept the Corporate Express brand name, merging its former BT Office operations into the newly enlarged subsidiary. Buhrmann's Paper Merchanting division, which generated EUR 3.0 billion in revenues in 2000, is the leading paper products distributor in Europe, with three strong brands: Hello, Motif, and IBM. Paper Merchanting is also active in the North American, Southeast Asian, and South African markets. The third Buhrmann division, Graphics Systems, accounts for an additional EUR 556 million in revenues and is the European market leader in the distribution of graphics machines, materials, and services, including a long history as a distributor of Heidelberg printing presses. Buhrmann, formerly known as KNP BT, itself a result of a merger in 1993, traces parts of its history back to the mid-19th century. Traded on the Euronext Amsterdam stock exchange, Buhrmann is led by chairman and CEO Frans H.J. Koffrie.

Packaging Acquisitions in the 20th Century

A long list of acquisitions went into the formation of the Buhrmann NV entering the 21st century, with roots stretching back to the mid-19th century--and beyond. Indeed, one of the company subsidiaries, the Robert Horne Group, which remained the United Kingdom's leading paper products distributor, traced its own history back to around the late 16th century.

The company's core business was first established, however, in Maastricht, in 1850, as Lhoest Weustenraad & Cie. That company later took the name of KNP, for Koninklijke Nederlandsche Papierfabrieken, after being granted royal status as a national paper manufacturer in The Netherlands in 1875. KNP established paper mills in Belgium and Germany, in addition to its domestic manufacturing operations, and opened offices in the United Kingdom, Italy, Spain, and France. KNP also entered the North American market, before listing on the Amsterdam stock exchange in 1938.

Other members of the later KNP BT merger were also in the process of formation. Buhrmann-Ubbens Papierengroothandel was set up in 1866 by GH Buhrmann as a wholesale paper products distributor serving The Netherlands' printing industry. In 1963, that company joined with NV Lettergieterij, which had been founded as Tetterode in 1851 as a distributor of printing equipment, to form Buhrmann-Tetterode NV.

Instead, Kappa Packaging found a buyer in venture capital firm CVC Capital Partners/Cinven Ltd., which paid NFL 3.4 billion ($1.7 billion), in 1998.

1870–1995

The third and youngest part of the KNP BT merger was the VRG Groep, which had been formed in 1950 through the merger of two companies, Van Reekum Papier, which had been founded in 1917, and NV Gepacy, founded after the end of World War II. VRG Groep grew quickly, and by the beginning of the 1990s had joined Buhrmann-Tetterode and KNP in the top three in The Netherlands' paper and office products market.

While its competitors concentrated on the paper and printing industries, Buhrmann-Tetterode branched out in the mid-1970s to enter related activities such as flexible packaging. That product group was added in 1975 with the purchase of Germany's Kobush Packaging. Buhrmann-Tetterode continued making acquisitions to expand its packaging division, including the 1988 acquisition of Sengewald and Nordwest Packaging in 1990, both of which were also located in Germany. Buhrmann-Tetterode also had opened a U.S. packaging arm, through its Sengawald subsidiary, in 1989.

Buhrmann-Tetterode had by then already taken steps to restructure its U.S. paper, packaging, and office products interests into a new subsidiary, BT Office Products International, which was established in 1984 and listed on the New York stock exchange in 1995. A strategic review of the U.S. market led Buhrmann-Tetterode into a related direction, that of contract stationery. Buhrmann's first major activity in this area came in 1987 when BT Office Products acquired 70 percent of Summit Office Supply Inc., based in New York. More acquisitions followed, including that of MS Ginn Company, based in Washington, DC, and Publix Office Supply, based in Chicago, both made in 1987. Buhrmann also increased its holding in Summit to 100 percent that year.

BT Office Products' expansion across the United States proceeded steadily during the 1990s as the company joined in a consolidation of the fragmented office supply and contract stationers markets. The company acquired Buschart Office Products of St. Louis, Missouri and EW Curry Company of Pittsburgh in 1990, and California's Redwood Office Products the following year. A second office was opened in Amsterdam to handle BT Office Products' growing European activity as well. Shortly before the public floatation of BT Office Products, the two offices were consolidated at the subsidiary's Chicago headquarters.

In 1993, Buhrmann-Tetterode, VRG Groep, and KNP announced their intention to merge their operations to become not only the dominant office products and paper distribution company in The Netherlands, but among the top companies in the industry in the world. Listed on the Amsterdam stock exchange, the company, now named NV Koninklijke KNP BT, quickly launched an aggressive acquisition drive to build up its market positions. Among the most significant of this new round of acquisitions was its merger with Austria's Leykam in 1994. Leykam had been founded in 1870 as Leykam-Josephtal near Graz, one of the centers of the Austria-Hapsburg papermaking industry. Leykam-Josephtal became the empire's largest paper producer, then survived the empire's collapse in World War I only to see the bulk of its operations destroyed during World War II. Leykam later merged with nearby paper mill Murztaler, creating Leykam Murztaler in 1974.

1996–1998

The merger with Leykam created a new subsidiary for KNP BT's paper manufacturing operations, KNP Leykam. The newly merged company became the European leader in its wood-free coated paper specialty. The parent company meanwhile continued its expansion, targeting in particular the U.S. market, with acquisitions such as that of Northwest Stationers and Supply and Far West Office Systems. As the company developed its office products and contract stationers operations, KNP BT targeted primarily large-sized companies.

Streamlined for the 21st Century

Moving toward the close of the century, however, KNP BT was also closer to a major restructuring of its operations--and the company's identity. A massive drop in paper prices in the mid-1990s had brought its KNP Leykam subsidiary into losses. By 1996, the company announced that it would no longer make new investments in the subsidiary. KNP BT soon began looking to exit the paper manufacturing market altogether, putting an end to what had long been KNP's core activity. The company sold its paper manufacturing division in 1997 to Sappi Ltd., of South Africa.

KNP BT soon announced its intention to exit manufacturing altogether. The announcement came upon a failed attempt to merge the entire company with fellow Dutch company Hagemeyer, which was in the process of redefining itself as a business-to-business services provider. KNP BT began looking for a buyer for its packaging arm, promising that, should no buyer be found, the packaging arm would be spun off as a separate, publicly listed company, Kappa Packaging. Instead, Kappa Packaging found a buyer in venture capital firm CVC Capital Partners/Cinven Ltd., which paid NFL 3.4 billion ($1.7 billion), in 1998.

KNP BT now restructured its operations around a new core of business-to-business distribution, particularly the office products market. The company bought back all of the shares of BT Office Products, removing it from the New York stock exchange. At the same time KNP BT changed its name, in part to reflect its new focus, but in part as a result of a lawsuit it had filed--and lost&mdashàinst similarly named KPN, the name of the recently privatized Dutch post office service.

1986–2001

The company chose the name Buhrmann NV to take it into the new century. Almost immediately, Buhrmann made a name for itself--in 1999, the company announced that it had acquired Corporate Express, based in Colorado, thereby becoming the world's leading office products supplier. The deal was worth $2.3 billion, including a cash price of $9.70 per share and the assumption of some $1.2 billion in debt.

Corporate Express had been established in 1986 by Jirka Rysavy, who had immigrated to the United States from his native Czechoslovakia at the beginning of the decade. Rysavy reportedly had spent his last year in Czechoslovakia meditating in a shed in an isolated area near the Polish border, telling the Boulder County Business Report, "I wanted to experience seeing myself through my own eyes." Arriving with little money in the United States, Rysavy quickly displayed a talent as an entrepreneur, opening a health food store, Crystal Market, in downtown Boulder. The store soon was turning over some $3 million per year. Yet Rysavy had been developing a new vision of building a corporate supplier of environmentally friendly products. Instead of developing the Crystal Market concept, Rysavy sold the store to Mike and Libby Gilliland, who transformed it into the $400 million-per-year Wild Oats Market retail chain.

Rysavy's new opportunity came with the purchase of an office supply store for just $100. Rysavy next used the $300,000 he had made with the sale of the Crystal Market to help him raise the funding for a takeover of the stationery division of Denver's NBI in 1988. That acquisition, which cost Rysavy $7.8 million, was just the first of more than 150 acquisitions made by the middle of the 1990s. By 1990, Rysavy's new company, called Corporate Express, was posting revenues of $70 million. Just four years later, the company's sales neared $700 million.

Not all of Corporate Express's fast growth was from acquisitions. The launch of the company's environmentally friendly EarthSaver line in 1991 proved immensely successful. By 1999, Corporate Express's sales had topped $4.5 billion. As the company's stock price proved highly volatile, Rysavy ceded his CEO position to company President Robert King, and then, at the urging of shareholders, abandoned his chairman position as well. When Corporate Express announced that it had agreed to be acquired by Buhrmann, Rysavy left the company altogether, concentrating instead on developing a third company, Gaiam, established in 1988. Buhrmann folded its BT Office Products operations into the new subsidiary in 2000, adopting the Corporate Express name for the company's worldwide office products operations.

Entering the 21st century, Buhrmann had successfully achieved a new identity for itself as the world's leading office products supplier. The company also was nearing the EUR 10 billion mark, posting EUR 9.6 billion in sales in 2000. Buhrmann was certain to reach EUR 10 billion in sales by the end of 2001: in March of that year, the company announced its intention to pay $250 million to acquire the office supply operations of failing U.S. Office Products, which also was selling off its Mail Boxes Etc. division to United Parcel Service. That company, which had filed for Chapter 11 bankruptcy protection in 2000 after posting losses of nearly $200 million, was expected to add approximately $1 billion in sales through its office products division. The two companies also were seen as highly complementary, as Corporate Express customers were primarily among large-sized companies, while U.S. Office Products' customer base was primarily among midsized companies.