Coats Viyella Plc Business Information, Profile, and History

History of Coats Viyella Plc

Coats Viyella Plc functions as a holding company for a group engaged in the manufacture, processing, and distribution of knitwear and garments, housewares, woven and knitted fabrics, sewing thread for industrial and domestic use, hand-knit products, fashionwear, and precision engineering products. It is Europe's largest textile group, employing more than 70,000 people and manufacturing in 35 countries.

As an entity Coats Viyella comprehends both the history of much of the United Kingdom's industry and the business career of one man, Sir David Alliance. Alliance came from a Tehran, Iran, family already involved in textiles, arriving in Britain in 1951, at the age of 19. He stayed and eventually presided as chairman over a group that is largely his own creation.

At the beginning of the 1980s there were four large British textile companies--Carrington Viyella, Coats Patons, Courtaulds, and Tootal Group. By the end of the decade two of them had fallen into Alliance's hands and a third was firmly in his sights.

The foundations for such growth were laid in the 1950s and 1960s. Alliance's first acquisition, in 1956, was Thomas Hoghton (Oswaldtwistle) Ltd., a firm of cotton goods manufacturers. Many such companies still existed in the so-called junior league of Lancashire textile firms and their acquisition, reconstruction, and turnaround was the substance of Alliance's activities for some years. By the end of the 1960s he operated through three vehicles--Alliance Brothers, a mail-order and textiles firm, R Greg & Company Ltd., a spinning and fashion fabric firm, and Northern Counties Securities, a finance group.

The pace of growth accelerated in 1968 when Alliance took control of publicly traded Spirella Company of Great Britain Ltd. through a reverse takeover involving R Greg. Spirella was to form the nucleus of what was to become Coats Viyella. In 1969 it became a holding company as Spirella Group Ltd. into which the textile interests of Alliance Brothers were absorbed. Together with his partner Jack Menaged, Alliance reorganized Spirella into three groups--foundation garment manufacture (the business of the original company), textile merchanting and spinning (based on Greg), and household textiles (based on Alliance Brothers).

Spirella soon set off down the road of further acquisition. The foundation garment side of the business was strengthened by the purchase of Richard Cooper & Company (Ashbourne) Ltd. and Leethems (Twilfit) Ltd. A more significant growth area was that of household textiles, particularly towels, where several takeovers were made. John Ainscow & Company Ltd. of Bolton was purchased in 1970, as was WT Taylor and Company Ltd. of Horwich. These two companies were merged with Stott & Smith Ltd., toweling and cotton goods manufacturers, to form the Stott & Smith Group Ltd. Other acquisitions at this time included the Barber Textile Corporation Ltd., Horrockses Ltd., and Dorcas Ltd.

By 1973 Alliance was already contemplating the takeover of another household textiles firm, Vantona Ltd. For Vantona the takeover of 1975 represented a reversal of fortunes, since Spirella had previously been seen as a possible target for Vantona to acquire. The ¥5 million offer for Vantona was widely seen as shrewdly judged rather than generous and the Vantona board was very publicly split. The industrial logic, however, was undisputed for while both companies were involved in household textiles, Spirella's strength in towels complemented Vantona's own strengths. The merger, misleadingly billed as the marriage of whalebone and sheets, led to the disappearance of the Spirella name, it being felt that it was too closely connected with corsetry ever to outlive the association. In 1976 the merged company changed its name to Vantona Group Ltd.

Vantona was then the third-largest producer of household textiles in the United Kingdom but still a relatively minor player within the industry as whole. It was all the more remarkable, therefore, that in 1978 Vantona was able to beat off the challenge of both Carrington Viyella and Courtaulds in order to acquire uniform manufacturers J Compton, Sons & Webb Ltd.

The next takeover, in 1982, was breathtaking in its scale for it involved a bid by Vantona for Carrington Viyella, a company eight times its size. Carrington Viyella, a manufacturer of garments, home furnishings, carpets, and fabrics, was a troubled giant, considered by many to be too debt-laden to be an attractive acquisition. It did, however, come with an attractive dowry of brand names including Dorma, Van Heusen, and Viyella itself.

The branded cloth was merely the most famous of a number produced by William Hollins & Company Ltd. (established 1784), the Nottingham-based yarn spinners. The name had been registered as a trade mark in 1894 and was derived from the Via Gellia, the road linking the Derbyshire villages of Cromford, where Hollins had a mill, and Bonsall. It had become synonymous with quality so that when, in 1961, Hollins became the core of a larger group, it adopted the name Viyella International Ltd. Viyella was to make numerous acquisitions throughout the 1960s before being taken over by ICI Ltd. in 1969 and merged with Carrington & Dewhurst Ltd. the following year.

Skepticism over the wisdom of the Carrington Viyella takeover was perhaps behind Alliance's difficulty in raising the required £50 million, a sum that would soon be made to seem modest. The importance of the Viyella name was again acknowledged when the group became Vantona Viyella PLC in February 1983.

The year 1985 saw another significant merger, with the Nottingham Manufacturing Company PLC, established 1805, after a friendly deal between Alliance and Harry Djanogly of Nottingham Manufacturing. The company was as cash-rich as Carrington Viyella had been debt-laden and brought with it strong links with the retailer Marks & Spencer, to whom Nottingham Manufacturers supplied hosiery and knitwear. This acquisition bolstered the group prior to the climactic merger in the following year with Coats Patons PLC.

Coats Patons was itself the result of a 1960 merger between J & P Coats Ltd. and Patons & Baldwins Ltd., J & P Coats had its origins in Paisley, near Glasgow, commencing thread manufacture in 1825. The business was especially successful in the North American market, and its growth culminated in a highly successful public offering in 1890. By the turn of the century, by amalgamation with other thread producers including its Paisley rivals, Clark & Company, Coats had become the largest textile firm in Britain, with factories worldwide.

Patons & Baldwins derived from two separate concerns--JJ Baldwin & Partners Ltd., established at Halifax in 1785, and John Paton, Son & Company Ltd. of Alloa, established 1813, that merged in 1920. The merged company was a woolen and worsted spinner, specializing in knitting wools, with factories throughout Britain, as well as in Canada, China, and Tasmania.

Early in 1986 Coats Patons was the subject of an agreed takeover bid by a knitwear group, Dawson International PLC. Coats had already been identified as a possible long-term target for Vantona Viyella but the proposed Dawson deal precipitated action by them. Dawson was successfully outbid by an offer worth £715 million. In March 1986 Vantona, like Spirella before it, was dropped from the company's name that then reflected its largest components in its new name, Coats Viyella Plc.

By 1989 it began to look as if another famous name would have to be accommodated. Tootal Group PLC was the descendant of the English Sewing Cotton Company Ltd., incorporated 1897, a sewing thread and yarn producer whose Sylko domestic sewing thread became a household name. As part of the trend towards larger groupings in the textile industry English Sewing Cotton expanded, acquiring the Manchester-based business of Tootal Broadhurst Lee & Company Ltd., incorporated 1888, in 1963. Five years later the company changed its name to English Calico Ltd. following the acquisition of the Calico Printers Association Ltd. The change of name was short-lived, and in 1973 the company became Tootal Ltd.

Although one of the "big four" of British textile firms, Tootal's disappointing performance during the 1980s had left it vulnerable to a takeover bid. This duly emerged in the shape of Australian entrepreneur Abe Goldberg, who acquired a 29.9% stake in the company. When he was rebuffed by the Tootal board Coats Viyella stepped in to acquire Goldberg's shareholding and to agree to terms for a £395 million takeover. The bid lapsed, however, after it was referred to the Monopolies and Mergers Commission (MMC).

Prospects revived after the MMC recommended that Coats divest itself of its U.K. and German sewing thread businesses, a condition with which it was relatively easy to comply. However, when it became clear that Coats was to renew its offer at a much lower valuation, Tootal's resistance grew. Reluctance to be taken over on the cheap, as they saw it, was accompanied by references to differing management cultures by the Tootal board. The Daily Telegraph, January 15, 1991, compared Tootal's behavior to " . . . a dowdy Jane Austen heroine: desperate to wed but equally desperate not to look too keen."

Finally, Alliance was persuaded to do what he had never done in all his deals up to this point--launch a hostile takeover bid. An initial offer worth £194 million was raised to £241 million in April and this was sufficient to win the day. Like many previous deals its appeal lay in its industrial logic rather than mere corporate aggrandizement, for while the two groups dominated the international thread market their businesses were largely complementary.

However, the takeover met with reservations on three counts. First, it had been said that the expansion of Coats Viyella has done little more than gather most of the surviving elements of a declining industry under the control of one company. The bid for Tootal succeeded, in this view, not because of Coats Viyella's own performance, which was judged disappointing, but because Tootal's results were even poorer. Second, fears had been expressed that the integration of the Tootal businesses might prove difficult and that Coats Viyella's record in this area had not been good; and third, that in achieving a dominant position in the industry, Coats Viyella might alienate customers fearful of becoming dependent on such a large supplier, and that they might now be inclined to seek alternatives.

Early indications were that Coats Viyella had appreciated the dangers of imbalance in this area and that through disposals excessive market share in certain areas would be voluntarily relinquished. The appointment of Neville Bain as chief executive in 1990 also increased business confidence. Formerly with Cadbury Schweppes PLC, his recognized skills in integrating businesses were matched by the £65 million set aside for integration costs following the Tootal takeover.

In the progression from private company to public company, to group, and finally to multinational status, certain features of the Alliance business style remained constant. Good relations at boardroom and shop-floor level generally prevailed, and management was decentralized with a small head office but tight financial control. Vertical integration was the goal, and the assistance of merchant bankers NM Rothschild & Sons Ltd. remained constant. The astonishing growth of the 1980s was arguably not matched in pace by the restructuring of the various elements of Coats Viyella into a coherent group, but the mergers themselves were a hard act to follow. Moreover, the U.K. textile industry remains particularly vulnerable to economic cycles, exchange rate fluctations, and foreign competition in spite of all efforts to allow for these. The sheer size, diversity, and international character of Coats Viyella give it the ability to survive in a very tough marketplace. The coming years will show whether it can prosper and grow.

Principal Subsidiaries: Albert Hartley Ltd.; The British Van Heusen Company Ltd.; Thomas Burnley & Sons Ltd.; D Byford & Company Ltd.; Carrington Viyella Exports Ltd.; Carrington Viyella Garments Ltd.; CV Apparel Ltd.; Heydemann Shaw Ltd.; CV Home Furnishings Ltd.; CV Woven Fabrics Ltd.; Youghal Carpets (Holdings) PLC (Republic of Ireland, 72&percnt); Dynacast Ltd.; Ewart Liddell Ltd.; J Compton, Sons & Webb Ltd.; Jaeger Holdings Ltd.; Vantona Ltd.; William Hollins & Company Ltd.; CV Carpets Ltd.; Priest (Lindley) Ltd.; Patons & Baldwins Ltd.; Mansfield Knitwear Ltd.; The Nottingham Manufacturing Company PLC; Coats Patons PLC; Vantona Viyella PLC; VV Household Textiles Ltd.; West Riding Worsted & Woollen Mills Ltd.; J & P Coats Ltd.; J & P Coats (UK) Ltd.; Pasolds Ltd.; Harlander Coats GmbH (Austria); Dynacast France SA; Schachenmayr, Mann & Cie, GmbH (Germany); Cia de Linha Coats & Clark Lda (Portugal); Coats Patons (North America) Inc. (U.S.A.); Coats & Clark Inc. (U.S.A.); J & P Coats (Canada) Inc.; Dynacast do Brasil Lda (Brazil); Linhas Corrente Lda (Brazil); Coats Patons (Pty) Ltd (Australia); Coats Viyella Finance NV (Netherlands Antilles); Cia Ind Hilos Cadena SA (Chile, 93%); Hilos Cadena SACel (Argentina, 90%); Consoltex Canada Inc. (80.8%); Dynacast Deutschland GmbH (Germany, 75%); Mez AG (Germany, 97%); Opti-Werk GmbH & Co KG (Germany); Cucirini Cantoni Coats SpA (Italy, 66.7%); Cia Anon Hilaturas de Fabra Y Coats (Spain, 76.6%); Santral Dikis Sanayii AS (Turkey, 75%); Dynacast Inc. (U.S.A.); J & P Coats (South Africa) (Pty) Ltd.; Patons & Baldwins Canada Inc.; Gelvenor Textiles (Pty) Ltd. (South Africa, 50%); Coats Patons (Hong Kong) Ltd.; PT Coats Rejo (Indonesia, 60%); J & P Coats (Manufacturing) Sdn Bhd (Malaysia, 51%).