[Manufacturer News] A Major Merger

After years of speculation and rumor, Whitmire Micro-Gen Research Laboratories and its parent company, Sorex, have been purchased. Several major industry suppliers had been considered in the running to take over the United Kingdom-based manufacturer, and it reportedly had been in discussion with potential suitors several times.

But in December, BASF announced that it would acquire the company for an undisclosed amount. The transaction will give BASF an increased presence in two of the most important pest control markets worldwide: the United States and Europe.

“The agreement with BASF to acquire our entire business is excellent news for our employees, customers and the pest control industry as a whole,” Sion Price, Sorex commercial director, told UK-based Pest magazine. “We see this creating a professional pest control business second to none in the world. It will have the resources and skills to ensure a level of product development and support that will stand pest controllers in the very best, long-term stead.

“It is very much business as usual for us all at Sorex,” Price added. “The acquisition moves forward as rapidly as regulatory approval will allow. Customer service will be our overriding concern throughout so everyone continues to receive the products and services they know and value from the people they trust.” 

Michael Heinz, president of BASF’s Crop Protection group, said: “We are convinced that combining our existing pest control business and research capabilities with the Sorex Group portfolio and expertise with application technology will strengthen us on several fronts. We will diversify into the U.S. general insect control segment and solidify our position in Europe. Combining our research and development capabilities will help us bring even more innovative solutions to pest management professionals.”

In the United States, BASF now becomes a major player in the general insect control market. In the termite sector, where BASF already is a market leader in liquid treatments, its portfolio is now broadened to include the second-largest termite bait offering: Whitmire Micro-Gen’s Advance Termite Bait System. In Europe, BASF now also advances to a strong position in rodent and insect control solutions for pest management professionals.

The Sorex Group is well known for having expertise in the area of rodenticides. The 60-year-old company has approximately 200 employees and recorded net sales of $92 million in 2007, primarily in the United States and Europe. The Sorex Group’s portfolio and customer focus — together with BASF’s worldwide presence — will help to grow the pest control business on a global level, according to BASF. Its formulation capabilities together with BASF’s insecticides portfolio will enable BASF to develop customized solutions for the professional pest control market.

Whitmire Micro-Gen’s products in the United States include a broad range of aerosol insecticides for general insect control, baiting systems for control of ants, cockroaches and termites, as well as numerous dilutable insecticide formulations.

Its strong position in pyrethrum-based insecticides, along with its Mother Earth line of insect control products, will give BASF a strong foothold in the fast-growing general insect control market, according to BASF. These product lines will be highly complementary to BASF’s Termidor and Phantom product lines. Sorex’s strong position in the European market is based on innovative technologies, especially in rodent control, which also broadens BASF’s offerings to professional pest control operators.

The closing of the transaction will proceed after final regulatory approval.

About BASF Professional Pest Control

• Professional Pest Control Headquarters Location: Research Triangle Park, N.C.
• Company History: German-based BASF Corporation was founded in 1865.The company’s Professional Pest Control group was formed in 2001 to focus initially on Phantom and Subterfuge. The company previously sold pest control products through a combined turf, ornamental and pest control group. In 2003, BASF acquired fipronil — the active ingredient in Termidor — its flagship product.
• Business Type: Publicly traded
• Owner: BASF Corporation
• Executive Team: Paul Rea, director, BASF Specialty Products; Keith Holmes, business manager, Professional Pest Control; Michael Littell, product manager, Professional Pest Control
• Products Offered: Termidor and Phantom
• Web site: www.pestcontrolfacts.org

About Sorex

• Headquarters Location: Widnes, Cheshire, United Kingdom
• Year Company Founded: 1949
• Company History: Sorex was established in 1949 to manufacture and market rodenticides. It is now recognized as a leader in rodenticide technology, primarily through its discoveries of the second-generation anticoagulants difenacoum and brodifacoum. In the UK, the company operates as two separate companies, Sorex Ltd. and Network Pest Control Services Ltd., and in international markets the products are available from Sorex International. In 2004, Sorex purchased Whitmire Micro-Gen.
• Products Offered: The Sorex Group markets rodenticide products under the Sorexa and Ratak brands, rodent bait stations as Roguard, and bird control products under the Network and Avipoint brands. In 2002, Sorex announced a partnership with Whitmire Micro-Gen to introduce Whitmire Micro-Gen’s Prescription Treatment products and support services in Europe, while Whitmire Micro-Gen provided access to the U.S. market for Sorex technologies.
• Web site: www.sorex.com

About Whitmire Micro-Gen

• Headquarters Location: St. Louis
• Year Company Founded: 1995, when S.C. Johnson purchased Whitmire (founded in 1934) and merged it with Micro-Gen (founded in 1970). Whitmire Micro-Gen was sold to the Sorex Group in 2004.
• Owner: Sorex International
• Executive Team: Andy Symons, president; Dave Poling, business director, Residential Markets; Nick Tresslar, marketing manager, Residential Markets; Jeff Martin, director, Termite Markets; Jeff Vannoy, marketing manager, Termite Markets.
• Markets Served: U.S. general pest and termite control market
  Products Offered: Whitmire Micro-Gen is a leading supplier of general insect control products and equipment to the U.S. structural pest control industry. The company manufactures aerosols and baits for insect control and are developers of innovative fly control equipment, ultra-low-volume fogging equipment and microencapsulation technology, as well as termite bait technology.
• Web site: www.wmmg.com

Distributors speculate on merger’s effects

Editor’s note: Product distributors have a keen interest in the pest control industry’s most recent manufacturer mega-acquisition. PCT caught up with representatives of several of the industry’s leading distribution companies to get their thoughts.

News of BASF’s acquisition of Sorex, which includes Whitmire Micro-Gen, did not come as a surprise to distributors, who had long heard rumors that such a sale was in the works.

Tommy Reeves, vice president of Oldham Chemicals, Memphis, Tenn., said he believed that Sorex/Whitmire Micro-Gen was being coveted by the industry’s largest basic manufacturers. “I think it’s an excellent fit for BASF. With fipronil coming off patent they need to widen their portfolio and this acquisition will definitely do that. BASF will become a stronger, more defensive player in terms of defending fipronil against other generic entrants into the marketplace.”

John Bolanos, vice president of Univar USA, based in Austin, Texas, said during the past several months “BASF was always one of the top names that came up whenever these rumors emerged. On the surface it appears to be a good fit that makes sense where you have two strong organizations that serve the PMP industry with essentially non-competing product lines.”

Southern Mill Creek Products of Ohio President Doug Ashbridge said the move makes sense for BASF. “BASF has a limited portfolio in (general) pest control products. Anything they add to the line helps them diversify and that’s a plus,” he said.

Likewise, Roland Rhodes, president of Rhodes Chemical Company, Kansas City, Kan., added, “I think it’s a very good decision by BASF, because they are strong in the termite market, but pretty weak in the general pest control market, and definitely don’t have the broad package line.”

Meanwhile, Reeves said he sees the sale as having potential benefits to distributors like Oldham.

“Number one, it will help to consolidate and centralize our ordering procedure. Instead of having two vendors we now have one. Secondly, it allows us to use the efficiencies and economy of scale of combining broad products into one vendor.”

Lon Records, president of Target Specialty Products, based in Santa Fe Springs, Calif., said the outcome largely depends on BASF’s actions moving forward. “It depends on how they run it. It depends on the value they bring to the marketplace that’s associated with those products,” he said.

Just what the sale will mean to end-users is less clear, according to distributors contacted by PCT. “I would expect that initially there should be no impact to the PMP community,” said Univar’s Bolanos. “Until decisions are announced about how the two organizations will be integrated, any other comments would only be uninformed speculation.”

Southern Mill Creek’s Ashbridge agreed that it’s too early to speculate, but is encouraged that the two companies that are merging have such stellar reputations, and that the buyer (BASF) is from within the industry. “If BASF and Whitmire both do a good job supporting the PMP and if the organization remains structured pretty much the same, I don’t see much of a difference.”
Rhodes views the sale as a positive development for distributors and PCOs, many of whom are “doing business differently” in these challenging economic times. “We (distributors) need to look to suppliers and, shall we say, one-stop purchasing. We try to sell that to our PMPs.”

Records also believes manufacturer consolidation is not necessarily a bad thing for the pest control industry. “It’s better to have fewer strong suppliers than more weak suppliers,” he said. “The stronger you are, the more value you can bring to the customer. If you’re just living from quarter to quarter you’re not making the investments in the value of the brand that you’ve got in the marketplace.”

Chris Donaghy, president of Residex, said distributors won’t be impacted much, but he is concerned about the overall industry impact of ongoing consolidation throughout the industry. “I think it’s a continuation of the whole consolidation trend that’s going on in the industry — that can only hurt,” he said.

Donaghy added that the level of manufacturer support would drop off since there will be fewer companies funding the same level of industry events. “Now you have (one less company). It’s all funneling through one manufacturer, not two. That’s what it boils down to: There’s less, for everybody (e.g., NPMA, state and local associations, industry-sponsored events).”

Distributors also agreed that more industry consolidation — at just about every level — is almost a certainty in the future. What that means for the industry remains to be seen. It could be a good thing or a bad thing. “The devil is in the details,” said Univar’s Bolanos. “In my experience I have seen consolidation that has been very good for the industry with the best of both organizations developing into a new strong company. On the other hand I have seen consolidation that has taken two good companies and resulted in a weaker, less customer-focused organization. The integration strategy and how well it is executed can have a lot to do [with] how positive or negative it is for the industry.”

The preceding sidebar was written by PCT Internet Editor Brad Harbison and PCT Assistant Editor Chuck Bowen. Contact Harbison at bharbison@giemedia.com, and Bowen at cbowen@giemedia.com.