Esau & Hueber with new strong backing
In the grand scheme of things, the recent change in shareholders and management at Esau & Hueber, a privately-owned supplier to the beverage industry, would only warrant a short notice. But given the current turmoil at international financial markets, Esau & Hueber’s story behind the headline shows the vulnerability of companies which do not have a strategic investor whose interest in them is vital and long-term.
The press release read: change in shareholders and management. On the face of it, nothing unusual. Such things happen time and time again. On 1 August this year Esau & Hueber, a Schrobenhausen-based manufacturer of yeast aeration and yeast management systems, announced that its previous shareholders, Group-Inox (formerly Nocado Armaturenfabrik) had sold its 75.5 percent stake to Bauer Resources, the subsidiary of another Schrobenhausen-based company Bauer AG, which is a stock market-listed construction and engineering group.
Had the Bauer AG not actively a stake in Esau & Hueber in order to expand its own “Resources” divisions, which specialises in water and environment issues, Esau & Hueber’s 86-year long history could have come to a sudden end and the future of its 40 employees might have taken a different turn.
Obviously, privately-owned companies have to organise succession differently to listed companies, especially if some form of familial succession is not an option. Don’t brewers know that? In such cases, privately-owned companies look for an alignment with another company. Ideally, the new investor is acquainted with the industry first hand. Over the past thirty years, Esau & Hueber was lucky that its partner Nocado supplied them with high quality valves and fittings, which enjoyed the high reputation of the Nocado brand. The past decade saw the company mature from a Bavarian producer of fittings with a predominantly local customer base to a world-class manufacturer of wort-aeration and yeast-propagation systems whose expertise is sought by brewers large and small. Today Esau & Hueber realises more than 60 percent of its turnover outside Germany.
For Esau & Hueber, linking up with Nocado, a company which also produces fittings and valves, worked well for almost three decades because Nocado never acted like an investor. Nocado and Esau & Hueber, as family-owned companies, shared a similar culture and similar goals.
Initially, they had come together to set up a distribution system for fittings in southern Germany. However, they did not leave it at that. Esau & Hueber branched out into the semi-conductor industry as well as into the pharmaceutical and chemical industry. These industries Esau & Hueber provides with high-purity-systems in stainless steel or synthetic materials and ozonizing systems for water treatment.
Esau & Hueber has always dealt with its customers in the beverage industry directly, furnishing them with plant and process units, while Nocado preferred to act as a service provider and extended workbench to other suppliers.
This strategic arrangement came under scrutiny when Nocado fell on hard times and a business review concluded that a new structure plus a re-focussing of Nocado were called for. The introduction of a holding structure – GROUPINOX –, which turned Nocado into a subsidiary like Esau & Hueber, was the first logical step. This was followed by a declaration that Nocado was moving away from the manufacturing of plant and back to the manufacturing of components.
At this point Esau & Hueber knew that their business interests had become irreconcilable. For Esau & Hueber plant manufacturing – and taking on responsibility for processes – remains key to its business success.
Fortunately, these changes at Nocado happened at a time when the Bauer AG took the decision to expand its business portfolio and branch out into environmental technologies.
To those unfamiliar with Bauer AG’s range of businesses, the publicly-owned company does not seem a logical first choice for Esau & Hueber except, perhaps, for the fact that it is also located in Schrobenhausen 70 km to the northwest of Munich. Esau & Hueber admitted as much in its letter to customers announcing the new sale.
Bauer AG is foremost a construction and engineering group that employs nearly 8,000 people and had a turnover of EUR 1.03 billion during its past financial year (ended December 2007). Despite being listed, the Bauer family is still the largest shareholders and controls 48 percent of the shares.
In 2007 the Bauer AG set up a third business unit, Bauer Resources, which focuses on issues to do with water, energy, the environment and raw materials. Its activities include the production of construction materials for water wells and the installation of process engineering plants for the remediation of soil and groundwater, among others.
When it comes to water and the environment, Esau & Hueber’s and Bauer AG’s interests coincide. This is why the Bauer AG knocked on the door of Esau & Hueber to inquire whether it could obtain a stake.
For Esau & Hueber, moving under the roof of Bauer Resources does not mean that it will re-invent itself as an environmental company. Far from it. It is indicative of Esau & Hueber’s brewing industry credentials that Christoph Sedlaczek, who together with his brother Bastian co-owns the remaining shares in Esau & Hueber, remains Managing Director of the company.
Currently, Esau & Hueber is fitting out five MillerCoors breweries in the United States with its FLEXI PROP yeast management system, which combines aerobic yeast propagation and crop-yeast revitalisation. That way MillerCoors can decentralise its yeast management and reduce costs, while safeguarding quality.
Moreover, there is a growing interest in the brewing industry in Esau & Hueber’s TURBO AIR, an aeration and oxygenation jet, which allows to send two kinds of gases through one line. Think of nitrogenation coupled with carbonisation and you’ve got the idea.
Bauer AG’s moniker is “Passion for Progress”. Well, Esau & Hueber will wholeheartedly testify to this.
