Spicers’ Timmermans buy: secure succession

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Spicers CEO Bill Armstrong and Timmermans founder Michel Timmermans speak to OPI+ about the benefits of their recent deal for their companies in particular and the European OP industry as a whole…

In 1954, two brothers by the name of Michel and Patrick Timmermans set up a family wholesaler in the Flemish town of Deinze, aiming to help OP dealers in their struggle for market share.

Some 51 years later on 3 October 2005, Spicers announced – through its parent company DS Smith – that it had acquired the family business, now the largest OP wholesaler in the Benelux markets with sales of €45 million ($55 million) in 2004, for an undisclosed sum.

It was a proud moment for the Timmermans brothers, who will continue to run the business. In a joint statement, they claimed it was "the right time to secure the future" of both the company and its now 130-strong workforce, and that Spicers’ business model had always been "an inspiration for Timmermans".

In an interview with OPI+, Michel Timmerman added: "It is a necessity to have strong wholesalers. In the future it will be very difficult for family-owned wholesalers to stay competitive towards the global dealers…We see advantages such as buying power and ecommerce know-how and we look forward to sharing experience and knowledge with the other national businesses that make up the Spicers network."

Bill Armstrong says that the similarity of the two wholesalers’ business model was an important factor in the deal. "Like us, Timmermans have a pure wholesaler model, just selling to retailers and dealers and not direct to consumers like some wholesalers do in Spain and Italy, for example…Spicers’ enlarged business will have sales of over €750 million and will have a significantly stronger position in Europe."

Jan Van Belleghem, director of interACTION, the wholesaling alliance that for five years has rented office space with Timmermans and of which the wholesaler was a member before the deal, also agrees that the acquisition was a logical one. "Spicers was not present in the Benelux market, which is a competitive one, so buying is the best to way to get in. And for Timmermans it was a great move as it had no successor to take on the business. It has been a public secret in the market that is has been for sale for about the last five years."

As a result of the Spicers deal, Michel Timmermans has stepped down from his position of interACTION chairman, a post he has held for four years. He has been replaced by Alan Barclay, CEO of Kingfield Heath.

Van Belleghem admits that he regrets that no other interACTION member bought Timmermans. "Obviously the ideal situation for Timmermans would be to sell to someone else at interACTION," he said. "But the financial resources of the member that was interested have been stretched of late due to other acquisitions, so he would need to wait for another two years before buying Timmermans. And Timmermans didn’t want to wait another two years."

The acquisition route has not been a common one for Spicers in the history of its European expansion. Its last three moves into new markets (Germany in 1998, Italy in 2002 and Spain in 2004), have involved greenfield start-ups. "With Timmermans it was a question of right time, right conditions," said Armstrong. "In a complicated market like Belgium, it is more logical to acquire Timmermans, which has two languages and two different cultures.

Armstrong claims that Belgium is also a deceptive market. "Belgium looks small on the map but it has a large white collar worker population, partly as a result of the European Union headquarters, which considerably boosts OP consumption."

Spicers and Timmermans are confident that the acquisition will benefit the European OP industry. "Dealers with Spicers will get greater access to the most important markets in Europe, and Spicers’ regional and national customers will get ideas from different markets on how they can improve their services," said Armstrong. "They will also benefit from Spicers’ aggregating buying power, which will allow us to buy better and be more competitive in the future."

InterACTION is perhaps the sole loser from the deal, Armstrong admits, because Timmermans played an active part in the organisation. But although Van Belleghem describes the interACTION staff as the "unfortunate victims" in the scenario, he claims that losing Timmermans will not greatly impact the organisation. "We post annual revenue of €1.5 billion and have 11 members, so losing one member, which with annual revenue of €45 million is not one of our biggest, will not cause us a major disruption. We have been growing at double digit rates and we will continue to do so without Timmermans.

"Timmermans know we are the unfortunate victims in this scenario and we have its full support in finding new offices," he added. "We are looking to move out within the next couple of weeks to somewhere in greater Ghent, so that the transition is as smooth as possible."

Looking forward, Armstrong claims Spicers will continue to develop the business in continental Europe. "There are still European markets where wholesaling is a raw concept so there remains a huge opportunity to develop wholesale as a channel of distribution in these markets. The challenge is to persuade customers, dealers and retailers of the merits of buying from a wholesaler."  

And among it all, Timmermans has not only been able to cash in on what has been near-on a lifetime of hard work, it also, in its own words, "gets to maintain the family atmosphere it always had".