D-60311 Frankfurt am Main
Telephone: (49) 69-218-3165
Fax: (49) 69-218-3218
Public Subsidiary of Veba A.G.
Incorporated: 1873 as Deutsche Gold-und Silber-Scheideanstalt vormals Roessler and 1953 as Chemische Werke Hüls AG
Sales: $4.99 billion (1998)
Stock Exchanges: Frankfurt Düsseldorf
NAIC: 325211 Plastics Material and Resin Manufactur-ing; 32551 Paint and Coating Manufacturing; 325412 Pharmaceutical Preparation Manufacturing; 325212 Synthetic Rubber Manufacturing
Degussa-Hüls is a globally active chemicals company with value-oriented management. Our core business is specialist chemicals, which we will consistently expand upon. Besides that, we are today also active in select areas having synergies to chemicals. We are focusing on growing business with a low cyclicity, above average potential for appreciating value and leading competitive positions.
1873: Founding of Deutsche Gold-und Silber-Scheideanstalt vormals Roessler (Degussa) in Frankfurt am Main.
1898: Degussa establishes a chemicals production plant in Rheinfelden.
1919: Degussa acquires Scheideanstalt Dr. Richter & Co. and enters the dental business.
1932: Purchase of carbon blacks plant makes Degussa the second largest producer of carbon blacks in the world.
1938: IG Farbenindustrie, along with partner Bergwerksgesellschaft Hibernia AG, form Chemische Werke Hüls GmbH to produce Buna.
1952: Degussa expands its chemicals operations in Wesseling, and IG Farbenindustrie is forced to disband by the Allies.
1953: Hüls is released from Allied control and allowed to incorporate as Chemische Werke Hüls AG; shareholders include Bayer AG, Kohleverwerungsgesellschaft, and Hibernia.
1970: Degussa builds a chemical plant in Belgium.
1973: Degussa founds a plant in the United States.
1979: Hüls becomes a wholly owned subsidiary of Veba AG.
1980: Degussa becomes known as Degussa AG.
1985: Hüls changes its name to Hüls Aktiengesellschaft, and Hüls America begins operations.
1998: Degussa AG and Hüls AG merge to form Degussa-Hüls AG.
Degussa-Hüls AG is a specialty chemicals company based in Germany. One of the largest chemical companies in Germany, the company was formed in late 1998 through the merger of Degussa AG and Hüls AG. Degussa-Hüls manufactures a number of chemical and metal products, including the plastic sheet brand Plexiglas. Its products are used to make tires, rubber and plastic goods, animal feed additives, pharmaceuticals, electronics, and paints. Other services offered by Degussa-Hüls include banking, venture capital, and analytical. Veba AG, a German energy company, owns 62.4 percent of Degussa-Hüls.
History of Degussa AG
Degussa's story begins in Frankfurt am Main in the first half of the 19th century. The Free City of Frankfurt, as it was known in those days, built its new mint in 1840 in the immediate vicinity of Degussa's present head office, following a commitment it had accepted in 1837 at the Mint Conference in Munich. Here, the South German states and the Free City of Frankfurt, which together made up the states forming the German Customs Union of the day, had agreed for the first time on a common monetary unit, the florin, and had undertaken to coin certain amounts of the new currency. The director of the mint, Friedrich Ernst Roessler, son of the mint counselor of the grand duchy of Hesse and living in the neighboring town of Darmstadt, at the same time established a precious-metals refinery within the mint at the behest of the city. He took a lease on the refinery and in January 1843 started operations at his own expense. Roessler thus laid the foundation for what was to become Degussa AG.
In addition, Friedrich Ernst Roessler established a chemical engineering laboratory not far from the Frankfurt Mint on the site now occupied by Degussa's head office. Byproducts of the sulfuric acid refinement process, in those days the standard method, were processed there, and silver nitrate for photography and cyanide compounds were produced.
As a consequence of the Austro-Prussian War of 1866, in which Frankfurt lost its political independence, Friedrich Ernst Roessler became a Prussian civil servant and had to discontinue his private refinery business. He was nevertheless able to acquire the now private refinery for his two eldest sons, Hector and Heinrich, both of whom had studied chemistry. They transferred refinery operations to the chemical engineering laboratory, located in a new factory built for the purpose, and continued to run both lines of business under the name Friedrich Roessler Söhne (Friedrich Roessler Sons) as a private company.
By developing an economical form of sulfuric acid refinement, a process which was still common--the electrolytic process was introduced in 1892 and 1895--Friedrich Roessler Söhne was technically well-equipped to take advantage of the creation of the new German Empire in 1871, when the coins of the former independent German states were replaced by the newly introduced mark currency, thus providing a favorable opportunity for extensive minting and refining activities. However, since the securities required by the empire on refinement orders could not be met, the precious-metals refinery Friedrich Roessler Söhne was converted into a joint-stock company, or Aktiengesellschaft, in January 1873 in order to enlarge its capital resources. Several banking institutions were behind the founding of the present Degussa, which from then on operated under the name of Deutsche Gold-und Silber-Scheideanstalt vormals Roessler (German Gold and Silver Refinery, formally Roessler) for more than a century. Only in 1980 was the acronym and telegram address Degussa, in common use since the 1930s, entered into the trade register with the addition of the term Aktiengesellschaft identifying it as a share-issuing company.
Its initial capital amounted to 1.2 million gold marks. Of the 2,000 shares issued, 525 were held by the Roessler family, representing 26 percent of the stock capital. The company's identity as a family business was preserved nevertheless, owing to the appointment of the brothers Hector and Heinrich Roessler to Degussa's first board of directors.
Degussa's first great commercial success came about as a result of its newly developed method of producing bright gold for the fire-resistant embellishment of chinaware and glass, following the completion in 1879 of the large-scale minting contracts for the German Empire. Other ceramic colors were later added to the list of products. Shortly afterward in 1882, Degussa began to produce bright gold in the United States. This led to the foundation of the Roessler & Hasslacher Chemical Company of New York in 1889, with affiliated companies and a plant in Niagara Falls, New York, which gradually took on the entire Degussa production program. As a consequence of World War I, these companies were lost to Degussa after their confiscation as German property. They were acquired in 1930 by E.I. du Pont de Nemours & Company, with which they merged two years later.
After the end of the 19th century Degussa's trade business expanded particularly rapidly. The company acted as sales agent for individual products and product groups manufactured by other chemicals companies, and conventions regulating production and sales were set up in both Germany and Europe. In order to obtain access to new products, the company often participated, even in a minor role, in their production. This business policy enabled Degussa to make considerable profits, with a relatively restricted capital participation, over a considerable number of years.
In 1898, together with the Aluminium Company of London, Degussa founded the Electro-Chemische Fabrik Natrium GmbH in Frankfurt. At Rheinfelden, on the Upper Rhine not far from the Swiss border, the company established a plant to produce sodium using the Castner process. This substance was needed by Degussa for manufacturing cyanide salts. Over the years the Rheinfelden plant, owned exclusively by Degussa from 1918, was the site of many production developments, in particular of active oxygen compounds--peroxocompounds--and the fumed silica Aerosil. Later, catalytic converters for the purification of automobile exhaust emissions were made in Rheinfelden.
In 1905 the Degussa chemist, Otto Liebknecht, developed a process for the production of sodium perborate from a sodium peroxide base. Sodium perborate had already become a highly successful product in a matter of months, with the introduction onto the market of the Henkel company product Persil, the first active detergent, in 1907. Persil at that time consisted of 15 percent sodium perborate produced by Degussa and 85 percent bleaching soda manufactured by Henkel. Degussa's participation in the world's first electrolytic hydrogen peroxide factory at Weissenstein, Carinthia, in Austria, also dates back to this time.
As early as 1905 Degussa had already been involved in the establishment of the Chemische Fabrik Wesseling AG in Wesseling, near Cologne. It thus consolidated its position in cyanide chemistry, now one of its longest-established fields of activity. Expansion continued in the metals division as well. By taking a holding in the G. Siebert platinum smelting works in Hanau, Degussa became active in the production of semi-finished precious metal goods.
Because a policy of international expansion was no longer possible during and immediately after World War I, Degussa strove to acquire domestic production sites. As early as 1919, it accepted an offer from the precious metal refinery, Dr. Richter & Co., in Pforzheim, southwest Germany, to take over this company. Pforzheim would eventually become the main production plant for Degussa's dental products, which would form part of the pharmaceuticals division. Gold alloys for jewelry and dentistry, solders, silver amalgams, and dental equipment were produced here.
An important new field of activity, organic chemistry, was entered into by Degussa in 1930-31 following many years of negotiations concerning the acquisition of the two large German charcoal production companies, the Holzverkohlungs-Industrie AG in the town of Constance and the Verein für Chemische Industrie in Frankfurt, with its numerous plants. Degussa now had access to a wide variety of organic chemical products. The Holzverkohlungs-Industrie AG had already succeeded in modernizing its processes and changing over to new products such as adhesives--Atlas Ago--during the merger negotiations. The company expanded its product range on an even more intensive scale after the merger, moving from methanol to formaldehyde, and from formaldehyde to pentaerythritol and acrolein--which gained great significance in methionine synthesis after World War II, when the amino acid methionine was used to treat widespread malnutrition--and ultimately to the plastic polyoxymethylene, developed jointly with BASF AG.
The company also began acetone production, based on the low-cost raw material alcohol. British Industrial Solvents Ltd. was founded as a joint venture with a partner company, Distillers Co. Ltd., of Edinburgh, in 1928. Based on methods developed by the Holzverkohlungs-Industrie AG, a large-scale plant in Hull was built for the production of acetone, acetaldehyde, acetic acid, and butanol. A process for the manufacture of water-free alcohol, which met with considerable demand as an admixture for fuel, proved a commercial success. Soon many domestic and foreign licenses were using the method at a total of 68 plants, together producing over five million hectoliters of absolute alcohol per year. Acetone paved the way for the production of acetone cyanohydrin, and acetone cyanohydrin led to methylmethacrylate (MMA) and polymeric methylmethacrylate (PMMA).
In 1932 Degussa acquired a small flame soot factory in Kalscheuren, near Cologne, which had run into financial difficulties. Degussa's involvement with carbon black can be traced to this date. By 1934 it had already succeeded in producing active gas black CK3 at Kalscheuren. Gas black produced in the United States had been for many years an indispensable product in the tire industry, which used carbon black as a strengthening filler. In the late summer of 1933, the German Ministry for the Economy approached Degussa with the demand that Degussa produce active gas black, based on domestic raw materials, at Kalscheuren. In 1935 Degussa researchers succeeded in developing the so-called gas black production process. This breakthrough yielded a product which could finally compete in the market against so-called channel blacks, which had been dominated by U.S. manufacturers until then. Together with the German tire manufacturers, Degussa founded the Russwerke Dortmund GmbH in 1936 for the production of carbon black using the Degussa CK3 process. Furnace black was later used as a strengthening agent by the tire manufacturing industry.
In addition to metals and chemicals, Degussa had a pharmaceuticals division, which was established in 1933 when Degussa purchased the Chemisch-Pharmazeutische AG Bad Homburg in Frankfurt am Main from its Jewish owners. It was difficult for Jewish-owned companies to operate under Nazi economic restrictions, so the owners offered to sell to Degussa. Shortly before the outbreak of World War II Degussa had developed into a significant group of companies. During World War II, all of Degussa's links with Allied countries were severed. However, Degussa continued its traditional activities within the framework imposed on the German economy by the government's war policies. Its broad production base provided Degussa with a large number of starting points in the initial period of reconstruction after World War II, during which destruction was considerable. In addition to war damage, the dismantling of the hydrogen peroxide plant--virtually the only production site left intact--in Rheinfelden on the Swiss border, the loss of all foreign assets, and of all plants and holdings located in the Soviet-occupied sector of Germany, Degussa also lost a large part of its precious metal stocks. The progress of reconstruction before the 1948 German currency reform was further hindered by forced decartelization measures introduced against Degussa, the investigation of its technical and trade secrets by the Special Services of the occupying powers, and the forced sequestration of Degussa plants located in the French Zone of occupation, including the factories in Constance and Rheinfelden.
The June 1948 German currency reform created the foundation for a new economic beginning. In the same year, Degussa began to rebuild its head office on the original site in Frankfurt. An additional administrative building was erected in Frankfurt in 1953.
A new hydrogen peroxide plant in Rheinfelden, a replacement for the one dismantled, was one of the first construction projects realized in Germany in the early 1950s. Plants for production based on the anthraquinone method were built in the 1960s and 1980s. Production of the fumed silica Aerosil also commenced in Rheinfelden. It had first been produced successfully in 1942 in the course of efforts to manufacture a cheap substitute for carbon black from readily available raw materials such as sand or silicates.
In 1952 Degussa began to build its own hydrogen cyanide factory in the newly established plant at Wesseling, near Cologne, very close to the Chemische Fabrik Wesseling branch; both were referred to jointly as the Wesseling plant. Production was later switched to Degussa's own process based on methane and ammonia. New markets for hydrogen cyanide, produced in Wesseling, emerged along with the discovery of the amino acid methionine and cyanuric chloride. Methionine met with considerable demand as an animal feed additive, improving the quality of protein. Cyanuric chloride was a primary product for herbicides, optical brighteners in textiles and paper, and reactive dyes.
The first plans for an overseas production site after World War II dated back to the early 1950s. Degussa founded the company Bragussa in Brazil and built a plant for production of ceramic colors on a site not far from Sao Paulo. Production began in 1955. The company was later merged with other Brazilian subsidiaries to constitute Degussa S.A., operating in all three Degussa sectors: metals, chemicals, and pharmaceuticals.
As well as building up a worldwide sales network, Degussa focused its attention on research activities that had to be postponed immediately after the war in favor of reconstruction of production facilities. Prior to World War II Degussa's research center was housed at the head office in Frankfurt but had to be evacuated to various sites during the war years and could not be reestablished on its former site owing to insufficient space. Consequently, at the start of the 1960s, a chemicals research center with laboratories and workshops was built on the site of Degussa's subsidiary at Wolfgang, near Hanau. The chemicals research and applications technology facilities, which were also moved to Wolfgang, were constantly being expanded.
Metals research operations were also grouped together directly next to the chemicals research center, and the precious metals refining and metallurgy operations were moved away from the center of Frankfurt in 1972 to take up residence in a new metals plant in Wolfgang.
As Degussa's production capacities in the Federal Republic of Germany were no longer sufficient, a large-scale chemical plant was built in Antwerp, Belgium, around 1970. The first production plants for sodium perborate, Aerosil, hydrogen cyanide acid, and cyanuric chloride started operations in 1970. A few years later, in 1974, the company took the first steps towards the construction of another large-scale chemical plant, this time in the United States, more than 90 years after the establishment of Degussa's first U.S. production plant. The Degussa Corporation U.S. produced silicon tetrachloride, Aerosil, methionine, cyanuric chloride, the herbicide Bladex, hydrogen peroxide, formaldehyde, and hydrogen cyanide at its plant in Mobile, Alabama. Polyoxymethylene was produced jointly with the BASF Corporation.
The United States contained the largest proportion of Degussa's foreign investments. These belonged to the chemical division, which included such products as catalytic converters for automobile exhaust emissions and chemicals, precipitated silicas, the vitamin B nicotinamide and, since 1988, three large-scale carbon black plants. Degussa's activities in the United States also included metals.
Carbon black activities in the 1980s were not only restricted to the United States, where Degussa acquired the carbon black plants of Ashland Oil in Ashland, Kentucky, and grouped them together into a separate company, the Degussa Carbon Black Corporation, a fully owned subsidiary of the Degussa Corporation. Degussa also purchased the European carbon black plants of the Phillips Petroleum Company of Bartlesville, Oklahoma. The carbon black plants in Ambes, France; Botlek in the Netherlands; and Malmö in Sweden became Degussa's property entirely, while Degussa also acquired a 50 percent holding in a carbon black plant in Ravenna, Italy. The company also acquired a 50 percent stake in a carbon black plant in South Africa.
Degussa's pharmaceuticals division also underwent a major expansion in the 1970s and 1980s. A majority holding in the Bielefeld-based Asta Werke AG, which produced anticancer drugs, had been acquired by the end of the 1970s. In 1983, the company became a fully owned Degussa subsidiary. A few years later, in 1987, the entire domestic and foreign pharmaceuticals activities--the Chemiewerk Homburg Branch, Asta Werke AG, and various holdings in Brazil, Italy, Austria, Switzerland, and India--were amalgamated to form Asta Pharma AG, whose headquarters were in Frankfurt. A further important acquisition by the pharmaceuticals division in the same year was the French pharmaceuticals group Sarget S.A. in Mérignac, near Bordeaux, together with several European subsidiaries. The Sarget group's principal products were analgesics, cardio-circulatory compounds, antiseptics, vitamins, and amino acid preparations.
The increasing influence of Japan and the steadily growing economic impact of Southeast Asia prompted Degussa to establish, in addition to its organizational network, its own production sites, and technical application centers in the Pacific Basin region.
In the course of the company's worldwide expansion, Degussa's organization has been streamlined. In addition to disincorporating the pharmaceuticals division and converting it to the Asta Pharma AG, Degussa's oldest area of activities, the metals division, was the target of extensive restructuring measures, including the complete takeover of the high-tech company Leybold AG and the resumption of primary recovery activities after an interlude of almost 100 years.
Degussa continued to strengthen its operations in the 1990s, and revenues reflected the efforts. Sales increased steadily from 1993 to 1998, from DM 6.59 billion to DM 7.39 billion. Significant events during the early 1990s included the acquisition of pharmaceutical company Temmler Group in 1990 and the formation of Cerdec AG in 1993. Cerdec, a subsidiary, was in the ceramic colors segment, which involved such fields as glass, color solids, glazing systems, and mixed phase pigments. Also in 1993 Degussa acquired a 20.4 percent interest in Muro Pharmaceutical, Inc., of the United States. The company upped its stake in Muro three years later by acquiring the remaining shares. In 1994 Degussa formed Qingdao Degussa Chemical Company Ltd., a carbon blacks joint venture with China. A year later the company purchased an interest in Ducera Dental GmbH & Co. KG and consolidated its dental activities at the Hanau-Wolfgang site.
In March 1996 Degussa gained a new CEO: Uwe-Ernst Bufe. Bufe, who had worked at Degussa Corp. in the United States, was viewed by industry analysts as an innovator. Bufe quickly restructured company operations and focused on strengthening core businesses by grouping Degussa's 11 operating units into four core groups: chemicals, health and nutrition, precious metals, and banking. Bufe announced plans to boost revenues of underperforming businesses, such as precious metals, automotive catalysts, and acrylics, and spun off the acrylates business into Agomer GmbH, a separate entity, in April 1997. In 1997 Veba AG acquired a 36.4 percent interest in Degussa for US$1.7 billion, and talk of a merger of Veba-owned Hüls AG and Degussa began to circulate throughout the chemicals industry.
History of Hüls AG
While Hüls was founded in 1938, it owed much to the 1888 invention of tires. Without tires and the consequent demand for rubber, there would have been no synthetic rubber; without synthetic rubber, there would have been no Hüls. The first patent for synthesizing rubber was filed in 1909, but the process was too expensive for commercial exploitation. After the automobile increased the need for tires, experiments began in earnest again. Based on the work of the Nobel prize-winners Carl Bosch, Fritz Haber, and Friedrich Bergius, Buna was created. First made in 1926, Buna was an economical synthetic rubber, based on coal and using sodium as a catalyst.
In the fall of 1935, the first experimental plant for the production of Buna was built by I.G. Farbenindustrie. A year later, the German government issued its second Four Year Plan, in which the importance of Buna production to the country's strength was stressed. On May 9, 1938, Chemische Werke Hüls GmbH was founded specifically for the production of Buna, with a capital stock of 30 million marks. I.G. Farbenindustrie owned 74 percent and Bergwerksgesellschaft Hibernia AG owned 26 percent of the new company. The first managing directors were Otto Ambros and Friedrich Bruning, and on the board were Dr. Fritz ter Meer and Wilhelm Tengenmann. All four men were representatives of the shareholding companies.
Construction of new factories was difficult during wartime, yet labor was obtained because the Nazis urgently needed Buna. The factory was built very quickly and in August 1940 production began. The annual capacity for production was 18,000 tons of Buna. The capital stock was immediately increased to 80 million marks. The company also produced chlorine, antifreeze, and other chemicals. In 1941 the production of Buna was increased to 40,000 tons annually. From this time, the chemists at Hüls began to work on the production of solvents, softening agents, and resins. Production was increased to 50,000 tons in 1942 and capital was raised to 120 million.
It was not until 1943 that the war began to affect Hüls negatively. The company had great difficulty in obtaining raw materials and surviving bomb attacks. The worst was a heavy daylight air raid on June 11, 1943, when 1,560 bombs were dropped on Hüls factories. The works were devastated, 186 people were killed, and 752 were wounded. Production stopped for three months. In spite of heavier bombing of the hydrogenation plants to stop the supply of raw materials, by 1944 the Hüls works reached maximum production capacity again, though they were still a main target of the bomb attacks. On March 29, 1945 a special unit of the German Army appeared with orders to blow up all of Hüls. It was Hitler's command that 'the enemy should find nothing.' The unit was persuaded to disobey these orders by Dr. Paul Baumann. Two days later, American troops marched into the factories.
Paul Baumann was one of the chemists who had worked on the development of Buna. He fought in World War I, then studied in Heidelberg with the Nobel prize-winner Philipp Lenard. Baumann received his doctorate in 1923, and first worked for I.G. Farbenindustrie, spending time at their offices in Baton Rouge, Louisiana. At Hüls he was quickly promoted to production manager. In 1945, when the British troops replaced those of the Americans, Baumann was made manager of works, then chairman of the board.
In 1945 the British, who were paying high prices for natural rubber at home, allowed the resumption of the production of Buna. At their orders, the company's name changed to Chemische Werke Hüls. The Potsdam agreement then forbade the production of Buna in Germany, and in order to survive the company had to change its products immediately. Since the country was short of everything after the war, Hüls had no problem coming up with new products, but there were other problems, chiefly with the customers. Hüls sold a preparation that was meant to be used against scabies. When it was discovered that this was being used to make illegal liquor, the product had to be withdrawn. A lice-killer also had to be withdrawn when it was learned that people were using it as a substitute for petrol. The list of other products Hüls was permitted to make in 1945 included softening agents, artificial resins, detergents, gases, colorings, antifreeze, and pharmaceuticals. Its main product, after the erratically produced Buna, was acetic acid.
In November 1945 the entire company was taken over by the Allied authorities and put under a financial control office. The 'de-Nazification' included the dismissal of Hans Gunther and Ulrich Hoffman. Other dismissals were planned but, as they would have meant the administrative collapse of the company, were not effected. The I.G. Farbenindustrie sales offices, Hüls's main outlets, were closed by the Allies. Hüls then cooperated with other companies on sales, but as this was regarded as joint operations, it too was stopped. All production of Buna was formally stopped by the British in 1948, partly as English, French, and Dutch colonies were experiencing a natural rubber boom, but also because the production of synthetic rubber was seen as potentially useful in the rebuilding of a German military effort. Hüls was faced with large numbers of employees and not enough work for them. The company began to produce vinyl chloride, propylene oxide, emulsifiers, and the polyvinyl chloride called Vestolit, but even so in 1949, many employees were made redundant, and plant works capable of producing 900 tons had to be dismantled.
In 1948 Hüls rather cleverly created 'produkt 1973,' a synthetic rubber made by the same process as that for Buna but with a few steps reversed. (It was also called 'umgekehrt Buna,' literally 'Backward Buna.') This was to be used in linoleum. Both the forward and the backward Buna required butadien for production. In 1949 the Allied governments banned all butadien. Hüls protested, but, as it was one of the few companies to escape the total disbanding of its works by the allies, it restrained its protests. Generally, Hüls was better treated than other companies after the war, in part because of its ability to change its production to acceptable areas, and of the ability of Paul Baumann to get on so peaceably with the Allies. Additionally, Hüls was a major producer of fertilizers, which were considered vital to the agricultural economy.
In 1950, when the rest of the world dreaded that the Korean War might become World War III, Hüls was pleased to record that turnover increased by 50.4 percent. Colonial unrest cut off the supply of natural rubber to the Allies, and in 1951 the production of some 6,000 tons of Buna was permitted. This was on the condition that all coal export agreements were honored first. The mines of Germany could not produce enough coal, so Hüls was forced to import coal from the United States. Not enjoying this arrangement, Hüls built its own small, temporary mine until the German mines could increase production.
The I.G. Farbenindustrie was disbanded by the Allies in Frankfurt in 1952. On December 19, 1953 Hüls was released from Allied control and converted to a joint stock company with a capital stock of DM 120 million. The following year, the company invested DM 85 million to expand plant production capacity. New products included Vestolen, a high-density polyethylene, and Vestopal, a polyester resin.
For some time, the production of Buna had ceased to be profitable, and the company had been working on ways to improve and modernize the antiquated production procedures. A new plant was proposed and a new company, Bunawerke Hüls GmbH, was formed in 1955. The shareholders were Hüls, with 50 percent, and its old partners from I.G. Farbenindustrie, in the guise of the company's three successors. Dr. Baumann was the managing director. In a very short time, Bunawerke was the largest producer of synthetic rubber in Europe.
Hüls grew apace. It built Power Station II, the first coal power station to operate on supercritical steam. In 1956 Quimica Industrial Huels do Brasil Ltda. was formed in Brazil. Plants were either converted or constructed to produce reinforcing agents, phthalic anhydride, and more acetylene. In 1961 the capital stock was increased to DM 120 million and Faserwerke Hüls GmbH was founded, with a capital of DM 33.6 million, to produce synthetic fibers.
In 1959, a quarter of a century after Hüls had begun manufacturing heavy detergents, it was discovered that they were major polluters of the environment. A law was passed in 1961 requiring that all detergents be reducible by 80 percent by the existing sewage plants. Three years later Hüls produced Marlon, a biodegradable surfactant. The whole episode was a minor setback in the phenomenal growth of Hüls, which continued to form new companies, introduce new chemicals, and establish new partnerships until, in 1971, its capital reached DM 310 million.
Veba and Bayer had long been owners of equal amounts of Hüls stock. This led to squabbles. In 1978, Veba bought out Bayer, increasing its shareholding of Hüls to 87.6 percent, and thus acquiring control. A reorganization was arranged, transferring all of Veba-Chemie AG to Hüls. Throughout the early 1980s, Hüls built plants all over Germany for a variety of functions, from sludge burning to the production of n-but-l-ene and powdered rubber. Acquisitions were a focus for Hüls in the late 1970s and 1980s as well, and in 1985 Hüls acquired Nuodex Inc., a colorants manufacturer located in Piscataway, New Jersey. This purchase marked the foundation of Hüls America. Also that year the Chemische Werke Hüls changed its name to Hüls Aktiengesellschaft.
In 1988 Hüls grew larger when the chemical operations of Dynamit Nobel AG were acquired and merged into Hüls. Dynamit Nobel's operations included plants at Rheinfelden, Lülsdorf, and Witten. Dyanamit Nobel's U.S. facilities were combined with Nuodex under the Hüls America name. A year later the company acquired the silicon wafer business of Monsanto Company and joined it with analogous Dynamit Nobel operations under the company name of MEMC Electronic Materials. Hüls boosted its share of Röhm GmbH to a majority stake in 1989 as well. Continuing with its acquisition strategy, Hüls gained a majority interest in Chemische Fabric Stockhausen GmbH, a leading manufacturer of superabsorbents, in 1991. During the course of the acquisition-hungry decade, Hüls also purchased German methacrylates manufacturer Rhm. By 1991 Hüls's sales had doubled since 1978, reaching DM 10 billion.
In 1991 Bunawerke Hüls GmbH was dissolved, with Hüls gaining the Marl operations and Bayer assuming control of the plants in Dormagen and France. The following year Hüls adopted a restructuring strategy that included plans to divest itself of non-core operations. By 1994 the company had pulled out of a number of sectors, including industrial gases, plastics and polyolefins processing, and PVC compounding. Hüls had also sold the Kunstoffwerk Hohn and Faserwerk Bottrop subsidiaries, as well as the plastics operations of Hüls America. Though Hüls progressed with core operations, with several new facilities coming on stream, such as a polypropylene plant at Scholven, an isophorone derivates plant in the United States, and a hydrogen production facility at Marl, the company suffered a loss of DM 671 million in 1993.
In 1993 Hüls gained a new chairman, Erhard Meyer-Galow, who continued with the divestment strategy. Between 1994 and 1996, the company shed businesses with combined annual sales of DM 2.2 billion. It exited chloroparaffin, electrofused product, and rubber production and sold Faserwerk Bottrop GmbH and Deutsche Hefewerke GmbH, among other operations. By 1995 Hüls was again profitable.
As Hüls divested itself of non-core operations, it also attempted to strengthen its core operations. Hüls gained a majority stake in Phenolchemie, a leading phenol producer, in 1994 and established several joint ventures--the leather and fur operations were joined with Ciba Geigy AG's to create TFL Ledertechnik; the lubricant additives operations of Rhm were combined with Rohm and Haas's to form RohMax; and Bayer and Hüls combined their latex operations in order to maximize profitability and strengthen international operations. In 1996 Nalco Chemical Company announced it would sell its superabsorbent chemicals operations to Hüls's Stockhausen subsidiary. The sale included Nalco's plant in Louisiana.
Parent Veba planned to invest DM 9.6 billion in Hüls for the period from 1997 to 2001. The amount, a significant increase over previous investments, accounted for 30 percent of VEBA's total group investments. Veba hoped to expand Hüls's international operations, and Hüls said it would strive to shift its primarily European sales to a more balanced portfolio of 50 percent of sales in Europe, 30 percent in North America, and 20 percent in Asia by 2000. In order to become more international, Hüls began to search for possible acquisitions in the United States. When they were determined to be too expensive, Veba acquired a 36.4 percent interest in Degussa AG, which had strong operations in the United States. Hüls's Meyer-Galow offered a glimpse of the future when he told Chemical Week in late 1997 that it was not Veba's plan to keep two chemicals subsidiaries. 'It will be one activity in the future,' indicated Meyer-Galow.
Late 1990s: Merger Between Degussa AG and Hüls AG
In early 1998 the announcement that Degussa AG and Hüls AG planned to merge was made. About 15 percent of company operations overlapped, which allowed for great growth potential, according to the companies. Both companies had neighboring facilities in Rheinfelden, Germany, Antwerp, Belgium. and Mobile, Alabama, which would be combined for greater production capacity. Proposed vice-CEO Klaus Albrecht announced in Chemical Market Reporter in November 1998, 'Degussa and Hüls share many strengths and complement each other perfectly. ... The merger will lead to a strengthening of our market position in numerous products--in methacrylates, fine chemicals, coating raw materials, silanes and fillers, in particular.' Expansion in North America and in Asia were noted as key objectives for Degussa-Hüls.
On December 18, 1998, a Degussa shareholders' meeting was held to vote on the planned merger. A majority 99.98 percent voted in favor of the merger, and on February 1, 1999, the new company was entered in German commercial registers. The merger was dated retroactively to October 1, 1998, which marked the beginning of the company's first fiscal year.
Despite high hopes for Degussa-Hüls, the new company's early performance was disappointing, primarily due to difficult economic conditions in Asia, Russia, and Brazil. For the first quarter ended January 1, 1999, the company reported a ten percent decline in sales. Degussa-Hüls eliminated more than 1,000 jobs between October 1998 and March 1999 to streamline operations, but profits continued to fall. For the first half of the fiscal year, the company's sales reached EUR 5.8 billion, an 11 percent decline from the same period a year earlier.
To boost operations, Degussa-Hüls announced it would spin off its precious metals division, automotive catalysts segment, and the Cerdec ceramic colors business into a new subsidiary, to be operational in January 2000. Degussa-Hüls acquired the remaining 30 percent interest in Cerdec AG Keramische Farben from Ciba Specialty Chemicals AG in March 1999 to become the sole shareholder. The new subsidiary, with plants in Europe, North and South America, Asia, and South Africa, would concentrate on performance ceramics, future-oriented electronics, automotive engineering, and metals chemistry. Degussa-Hüls also combined Röhm GmbH and Agomer GmbH, two methacrylate chemicals operations, in March with the intention of improving its market position in the methacrylate market.
Degussa-Hüls noticed improvement in some sectors in the third quarter of its first fiscal year, but earnings remained low compared to year-earlier figures. For the first nine months of Degussa-Hüls's first fiscal year, overall sales fell ten percent. Undaunted, the company continued to focus on improving performance. In June Degussa-Hüls's subsidiary Stockhausen GmbH & Co. KG formed a joint venture with Röhm and Haas Company of Philadelphia. The joint venture would produce acrylic acid at two sites: one in Marl, Germany, and the other in Deer Park, Texas. Another subsidiary, ASTA Medica AG, sold affiliate Temmler Pharma GmbH, which manufactured medicines that treated diseases of the central nervous system, pain, and gastrointestinal disorders.
In September 1999 the company announced plans to invest DM 500 million ($260 million) in its silanes operations. In addition to expanding organosilanes plants at Mobile, Alabama, and Antwerp, Belgium, Degussa-Hüls planned to build a second plant at Antwerp, to be operational in 2002. Also in September Degussa-Hüls indicated it would sell its stakes in the joint ventures Ultraform GmbH and Ultraform Company to BASF Aktiengesellschaft. Both companies made thermoplastic polyoxymethylene, which was used in automotive components and mechanical and electrical engineering.
As Degussa-Hüls approached the 21st century, the company was still in its infancy but confronted many challenges and changes. In October 1999 majority shareholder Veba A.G. announced plans to merge with competitor Viag AG, a Germany company with operations in telecommunications, energy, and manufacturing. The estimated $14.2 billion merger was motivated by consolidation in the energy industry in Europe. The resultant company, however, would focus on chemicals as a core operation. The deal would add Viag's subsidiary SKW Trostberg to the Degussa-Hüls group to create the largest German specialty chemicals corporation. Degussa-Hüls looked toward the proposed merger with anticipation; the company, with sagging profits, was under pressure to improve performance and bring profits up to expectation levels. Degussa-Hüls believed the merger would provide the company with market advantages and opportunities for growth.
Principal Subsidiaries: Degussa Bank GmbH; Infracor GmbH; CREAVIS GmbH; ASTA Medica AG; Stockhausen GmbH & Co. KG; Röhm GmbH; Vestolit GmbH; OXENO Olefinchemie GmbH; Phenolchemie GmbH & Co. KG; Cerdec AG.
Principal Divisions: Health and Nutrition; Specialty Products; Polymers and Intermediates; Performance Materials.
Principal Competitors: BASF Aktiengesellschaft; Bayer AG; Hoechst AG.
Alperowicz, Natasha, 'Degussa's Turning Point: New CEO, Veba Stake Spell Change,' Chemical Week, September 17, 1997, p. 26.
------, 'Huls Takes on a New Shape; Seeking Integration with Degussa,' Chemical Week, December 24, 1997, p. 12.
'Degussa and Hills Finalize Merger Forming a Specialties Powerhouse,' Chemical Market Reporter, November 2, 1998, p. 8.
'Degussa-Huls Continues Integration; Focuses on Global Product Portfolio,' Chemical Market Reporter, April 19, 1999, p. 16.
Deutsche Gold- und Silber Scheideanstalt vormals Roessler 1873-1923, Frankfurt am Main: Degussa, 1923.
Dittrich, Gunther, H. Offermanns, and H. Schlosser, 'Von der Münzscheiderei zum L-Methionin,' Chet, June 1977.
Hume, Claudia, 'Veba-Viag Merger Creates a Specialties Giant,' Chemical Week, October 6, 1999, p. 7.
Mayer-Wegelin, Heinz, Aller Anfang ist schwer: Bilder zur hundertjährigen Geschichte der Degussa, Frankfurt am Main: Degussa, 1973.
Pinnov, Hermann, Degussa 1873-1948, Frankfurt am Main: Degussa, 1948.
Wolf, Mechthild, It All Began in Frankfurt: Landmarks in the History of Degussa AG, Frankfurt am Main: Degussa, 1989.
------, 'Porträt Heinrich Roessler 1845-1925,' Chemie in unserer Zeit, June 3, 1986.
------, Von Frankfurt in die Welt, Frankfurt am Main: Degussa, 1988.
Source: International Directory of Company Histories, Vol. 32. St. James Press, 2000.