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Marketing Strategy of Dalkia Holding -
December 16th, 2010
Joint Venture of Veolia Environnement SA and Electrice de France
Sales: EUR 4.58 billion ($4.77 billion) (2002)
NAIC: 333415 Air Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment
Dalkia offers its customers all services that are not directly linked to their core activity.
Our ambition is to create and maintain an ideal living environment for our customers, so that lasting co-operation is developed as a result. All of this occurs in the ideological context of energy-related efficiency, respect for the environment, attention to quality and a situation where people's health and safety are a priority concern.
1853: Compagnie Générale des Eaux (CGE) (later Vivendi, then Veolia Environment) is founded.
1935: Chauffage Service is founded.
1944: Compagnie Générale de Chauffe (CGC) is founded.
1960: CGC and Chauffage Service merge as CGC.
1967: CGE acquires a stake in CGC.
1980: CGE acquires control of CGC.
1986: CGC acquires Montenay.
1990: CGC creates an installation division, CGC Entreprise.
1994: CGC acquires Bergeon.
1995: CGC and Montenay merge operations, becoming CGE's Energy Services division.
1998: CGC becomes Dalkia.
2000: Vivendi and EdF merge their Energy Services businesses as Dalkia Holding.
2004: Dalkia acquires 93 percent of Czech Republic's Teplarna Usti.
Dalkia Holding is Europe's leading provider of energy services. France-based Dalkia's range of services include on-site energy management, including the operation of heating and air-conditioning systems; design and operations of industrial fluid (steam, electricity, compressed air, and so forth) systems; facilities management, including reception and switchboard management services; cogeneration facility operation; and technical services. Dalkia's customers include small and large municipal governments, such as the city of Lyons in France or Kuala Lumpur in Malaysia, as well as industrial and corporate customers. The company serves an impressive number of facilities, including 2,500 industrial sites, 4,000 sports, leisure, and cultural stadiums and centers; more than 9,000 schools and research centers; more than 2,000 hospitals and health care facilities; and more than 4.6 million homes. The 70,000 facilities under the company's management encompass more than 105 million square meters. The company's own power production capacity nears 4,000 megawatts (MW). These operations combined to produce more than EUR 5.1 billion in annual sales ($5.5 billion) in 2003. Some 34 percent of those sales were generated outside of France. Dalkia operates through three primary subsidiaries: Dalkia France; Dalkia International, with operations in 31 countries outside of France; and Dalkia Investissement. Dalkia was created in 2000 through the merger of the energy services operations of Vivendi Environment (now Veolia Environment) and former French electricity monopoly Electricite de France (EdF). Veolia remains the company's largest shareholder with a 66 percent share, while EdF maintains a 34 percent stake.
CGE Diversification in the 1960s
Compagnie Generale des Eaux (CGE), was one of France's first privately owned industrial giants, formed in 1852 under a government then headed by Napoleon III. CGE and its founding shareholders--including members of the Rothschild, Lafitte, and de Morny families--had recognized the emerging market for water supply services as part of the country's early industrialization effort. Lyons became the first city to award its water services contract to CGE in 1853, followed by the city of Paris in 1860.
By the turn of the 20th century, CGE was not only one of France's major water suppliers, it was also one of its largest industrial concerns, with a strong international component as well. By the time of its 100th anniversary, CGE had become a French institution, serving more than eight million customers across a 10,000-kilometer water supply network.
CGE began to diversify in the 1960s. In the end, that diversification process was to result in the company's transformation into the giant globally operating conglomerate Vivendi Universal, one of the world's largest companies entering the 21st century. If Vivendi ultimately became as well known for its media interests, including Time Warner, Universal Music, Havas, and AOL, its initial diversification remained closer to its core as a utilities operator.
One of the CGE's first moves toward diversifying its base came in 1967, when it acquired a stake in Compagnie Générale de Chauffe. That company traced its origins to 1935, when Léon Dewailly created Chauffage Service, one of the earliest specialists in developing and installing heating and air conditioning systems in France. Compagnie Générale de Chauffe (CGC) was itself founded in 1944 to provide heating and air-conditioning systems to the industrial sector. Both companies grew strongly in the aftermath of World War II as France launched a massive reconstruction effort to rebuild its industrial infrastructure. In 1958, CGC extended its business to include facilities management when it was awarded the heating management and facilities maintenance contract for all of the United States' NATO military bases in France.
Chauffage Services and CGC merged in 1960, becoming a French leader in its sector under the CGC name. The company then joined the international market, entering the United Kingdom in 1966 as a founding shareholder of Associated Heat Services (AHS) in partnership with that country's National Coal Board (NCB). CGC later acquired full control of AHS after NCB's exit in 1982.
CGC in the meantime continued its growth, backed by the CGE as its primary shareholder. In 1970, CGC acquired two other heating services specialists, Armand, founded in 1913, and Interchauffage, founded in 1960. The two companies were then merged together under the Armand-Interchauffage name. CGC expanded again in 1976 with the purchase of two new companies, Capelier, a company founded in 1919, and EGCS, which had been founded in 1945. CGC also emerged as an important innovator in the energy services market, especially during the oil crisis of the early 1970s. In response to the soaring price of oil, CGC began developing energy recovery systems and heating systems based on geothermal energy sources in 1973.
Emerging Energy Services in the 1990s
By the early 1980s, CGE increased its stake in CGC to 80 percent before later acquiring full control of the company. This move was made as part of CGE's larger consolidation effort, a process that resulted in the creation of a dedicated environmental services division, later spun off from Vivendi as Veolia Environment. As part of that restructuring, CGC acquired Société Auxiliare de Chauffage in 1982. CGC then restructured its own operations, spinning off its installation operations into a new subsidiary, CGC Entreprise.
CGC acquired another prominent group, Montenay, in 1986. Montenay stemmed from a company founded in 1860. Under Georges Montenay, the company established a coal distribution business in 1929. This business in turn led Montenay to launch a heating services unit in 1947. Montenay went on to develop its own international component, starting in Belgium in 1968. Montenay had been growing through acquisitions in the 1980s. In the years between 1983 and 1986, Montenay had acquired Quintiens, which specialized in industrial and naval electrical systems; Francis & Tytgat, which focused on the electrical and hydraulic systems installation sector; and EIT and UTIBEL. Following its acquisition by CGC, Montenay added several more businesses, including Sanivest and Relaitron.
Montenay and CGC remained separate companies into the 1990s. CGC in the meantime pursued its own growth, with a particular emphasis on France's northern region. In 1990, the company founded CGC Entreprise Nord and acquired several local businesses, including Bouchez, based in Calais since the late 18th century; Bele, based in Dunkirk; and Dehon, based in Saint-Quentin.
By the mid-1990s, CGE had acquired a reputation as a "corporate octopus." Indeed, by then the company had more than 2,200 subsidiaries, with operations ranging from its original water supply services to amusement parks, construction, railroad operations, mobile phones, and cable television. The arrival of Jean-Marie Messier as head of the company in 1996 spelled the dawn of a new era for CGE and its energy services subsidiaries. Messier began refocusing the company toward a dual core of environmental services, on the one hand, and media and communications on the other. As such, CGE began a massive restructuring, spinning off some $25 billion in businesses, such as its construction operations, spun off as Vinci.
As part of its restructuring effort, the company merged CGC and Montenay in 1995, creating the Energy Services division. The following year, that division regrouped its installation operations--including CGC Entrepise, Armand-Interchauffage, and others--under a single entity, Crystal SA. Then, in 1998, after CGE changed its name to Vivendi, the Energy Services division adopted its own name, Dalkia. The following year, the then Vivendi Universal spun off its environmental businesses, including Dalkia, into a new company, Vivendi Environment. In 2002, Vivendi Universal reduced its stake in Vivendi Environment to just over 20 percent. The newly independent Vivendi Environment changed its name to Veolia Environment in 2003.
European Energy Services Leader in the 21st Century
Dalkia continued to build on its international operations in the mid-1990s. In 1995, for example, the company, which had already entered South Korea through a stake in Kukdong Energy, increased its position there with the formation of the joint-venture Hanbul Energy Management Co. The company also added to its position in France with the takeover of rival Bergeon, based in Nice, in 1994. That purchase later led to a degree of controversy, with Dalkia accused of provoking Bergeon's bankruptcy in order to gain control of its contracts.
Vivendi Environment meanwhile had begun looking for a energy supplier partner for Dalkia in the late 1990s. Under pressure by a rapidly climbing debt-load, Vivendi formed an agreement with France's electricity monopoly EdF in 2000 to merge the two companies' energy services operation. Vivendi gained 66 percent of the merged business as well as a much-needed cash injection of some EUR 1 billion. EdF, faced with the loss of its electricity monopoly in France, for its part gained a means of expanding the range of energy services it was able to offer to its own customers.
In exchange for a 34 percent stake in Dalkia, EdF contributed its own energy services businesses. These included Clemessy, founded in 1900, with a specialty in the electrical engineering, industrial maintenance, process automation, and complex systems design, and Citelum, established in 1993 as part of EdF's entry into the market for public lighting and traffic control systems.
Following the merger, Dalkia and EdF established a joint-venture subsidiary, Edenkia, offering comprehensive development and management of energy services systems. Dalkia's international component, named Dalkia International expanded the group's operations in 2001 with the acquisition of Italy's Siram SpA. That purchase gave Dalkia control of the leading energy services operation in Italy. The following year, Dalkia headed north, acquiring DBU Holding, a provider of electro-engineering services in the Netherlands. The addition of DBU enabled Dalkia to take the lead of the energy services sector in that country as well.
Dalkia began targeting the Eastern European market as well, building up a number of contracts in the region in the early 2000s, including operations in such cities as Vilnius, Lithuania, and Poznan, the Czech Republic, in 2003 and 2004. The company also began acquiring a presence in the region as well, buying up a controlling stake in the Czech Republic's Teplarna Usti. In 2004, the company boosted its stake in Teplarna to more than 93 percent. As part of its move into Poznan, the company also agreed to buy a 51 percent share in that city's heat supply operation, Przedsiebiorstwo Energetyki Cieplnej. By then, Dalkia's revenues had topped EUR 5.1, making it the leading energy services company in Europe. With the financial and operational backing of Veolia and EdF, Dalkia appeared certain to remain a major force in the region's energy services sector.
Principal Subsidiaries: Am'Tech Industrie; Citelum; Clemessy; Crystal SA; Dalkia AB (Sweden; 74.79%); Dalkia BV (Netherlands; 74.79%); Dalkia Chile (Chile; 74.79%); Dalkia Energia Y Servicos (Spain; 74.79%); Dalkia Facilities Management AB (Sweden; 74.79%); Dalkia GmbH (Germany; 74.79%); Dalkia Holding SpA (Italy; 75.79%); Dalkia Malaysia (Malaysia; 74.79%); Dalkia Morava (Czech Republic; 74.79%); Dalkia NV (Belgium; 74.79%); Dalkia plc (United Kingdom; 75.79%); Dalkia Pte Ltd (Singapore; 74.79%); Dalkia SGPS SA (Portugal; 74.79%); Dalkia Suisse (Switzerland; 74.79%); Dalkia Technologies; Dalkia Termika (Poland; 74.79%); Edenkia; Ekoterm CR (Czech Republic; 74.79%); Exhor; Finergia (Italy; 75.79%); Prochalor; Prodith; Proxiserve; Serdi; Sicam SpA (Italy; 74.79%); Socup; Sopardel; UAB Vilniaus Energija (Lithuania; 74.79%).
Principal Competitors: United Technologies Corporation; Mitsubishi Heavy Industries Ltd.; ABB Ltd.; Sanyo Electric Company Ltd.; Denso Corp.; Electrolux AB; Al Zamil Group of Cos.; Linde AG; Ingersoll-Rand Company Ltd.; American Standard