The East Asiatic Company (EAC) came into being in March 1897. It was established on the basis of the firm of Andersen & Co., which had commenced trading in Thailand thirteen years earlier. The founder of the Company, the then sea-captain H.N. Andersen, naturally looked upon shipping, as the main activity, but from the outset he pursued a policy aimed at mutually beneficial interplay between the different mercantile factors of shipping, trade and industry.
At its inception, the Company’s organization consisted of offices in Copenhagen and Bangkok, the latter mainly based on the teak forest concessions, taken over from Andersen & Co., and the timber export business associated therewith. A start had also been made with the export of various Eastern commodities and import of a number of products from Europe. The Copenhagen office looked after the European side of the business and initiated the Company’s shipping activities by ordering the first vessels.
The progress of events during the life of EAC can be broadly divided into four periods.
The first period, extending from the founding of the Company to the First World War in 1914, during which the fundamental policy was pursued, at times under considerable difficulties. The strategic principles were based on three pillars: (1) ocean shipping (2) trading and agency business from network of EAC’s own branch offices in most Asian countries, and (3) investments in industrial enterprises, on the principle of interaction between trading and sea transport. The Company’s vessels enjoyed captive business from its trading activities and facilitated access to new import and export markets for the Company’s commodities and products.
EAC had, in the course of 15 years, established itself as Denmark’s largest, most powerful and expansive enterprise listed on Copenhagen Stock Exchange. The number of employees expanded from 2,500 in 1907 to 10,000 in 1912.
The second period, covering the years between the two world wars, a period which turned out to be very challenging for the world economy. Nevertheless, EAC continued to expand and at the end of 1920s, EAC and its subsidiaries had over 20,000 employees on 6 continents.
The effects of the wars, the subsequent changed political landscape, increasing protectionism and the 1929 economic crash, caused the Company to be less dependent on its original strategy for inter dependence and mutually beneficial interplay between the businesses it controlled. Initiatives to expand the local markets, where EAC had gained strong footholds, became a new focus area. Products and services from third parties were being included in the Company’s trading and shipping portfolio, resulting in significant increase in the Company’s turnover.
EAC’s network of offices continued to expand and many new representations were added, including a presence in South Africa.
The third period, from immediately after the Second World War up to the end of 1970s, was characterized by continued strong growth and the Company’s network of offices and engagement in industrial venture reached world-wide coverage. Apart from its unique presence in most Asian countries, the Company also became well established with own offices and investments on the African continent, Australia as well as South and North America.
The Company developed into the largest conglomerate in Scandinavia with a network of about 70 branch offices, more than 180 subsidiary companies and its own fleet of 25 modern cargo vessels deployed in the world’s major trade lanes. These many enterprises were located in 50 countries and the Company employed approximately 40,000 people.
During the previous period of rapid expansion, the Company’s debt had increased significantly and with exceptional high interest rates at the time, the Company’s profitability had come under threat.
The fourth period, from 1980 to 2006, therefore, focused on transformation and streamlining the Company’s vast and diversified business. Divestment or closure of non-strategic businesses were pursued and the Company became a smaller company, organized in 5 product-orientated divisions. In 1990, the number of employees had been reduced to 16,000.
During the 1990s, the transformation of the Company continued, and a new strategy for EAC to become a major Asian nutrition food company was adopted. This strategy was based on the business platform of the Dumex Division – one of the Company’s five product divisions. The Dumex business, based on pharmaceutical and nutrition products, was established by EAC in India in the late 1950s and subsequently expanded to other Asian countries, including China. In 2005, however, in response to an unsolicited offer from Dutch Royal Numico N.V., the Dumex nutrition business was sold for DKK 9 billion.
The Company was now left with only three businesses with a turnover of DKK 3 billion, a market value of DKK 11 billion employing 4,000 people. With a cash position of more than DKK 8 billion, the board of directors considered various strategic alternatives for the Company to pursue. It was decided, however, to recommend to shareholders to distribute the company’s cash position in one dividend disbursement. At the same time, the board committed to develop the Company’s remaining three businesses to maximize their value, divest them and distribute the proceeds to shareholders as dividend pay-outs.
After disposing of two of the three remaining businesses, the Company’s listing on the Copenhagen stock exchange, which dates back to 1897, was transferred to the third and last business unit, Santa Fe Group Limited, which is headquartered in London, United Kingdom.