$MCM.MC Miquel y Costas & Miquel SA

A Spanish hidden champion

Nov 17, 2024

One of the good places to look for interesting companies is in non-attractive industries - because that means limited competition.

The company I will go through is Miquel y Costas & Miquel SA a Spanish company dedicated in manufacturing and sales of fine and specialty lightweight papers in Spain and internationally.

The company was found in 1752 and is based in Barcelona, Spain.

The short history below is from a book called “100 Families That Changed the World” i will give you the link.

The paper manufacturing company Miquel y Costas & Miquel (MCM) has its origins in 18th-century Catalonia. It began its activity back in 1725, when the Miquel i Costas family started manufacturing handmade paper in the town of Capellades, Barcelona. At the time, this Catalan town was one of the main focal points for paper production, with over 50 highly versatile paper mills. After more than 150 years of history the family decided to give legal status to its manufacturing activity and founded the company Miquel y Costas in 1879. One of the first indicators of technological progress in the Catalan papermaking industry came about with the Picardo machine, which incorporated intermediate technology to bridge the gap between handmade paper manufacturing and continuous production. This new device, created in Italy, made it possible to produce individual sheets of paper mechanically. The Picardo was imported in 1877 by four paper manufacturing companies located in Capellades: Jover y Serra, Hijos de Romaní y Tarrés, Wenceslao Guarro and Antonio Serra y Sobrino, all of which increased their productivity notably. Miquel y Costas, however, continued its handmade paper production and specialized in manufacturing smoking paper, which was sold under the El Pino brand name. The brand’s specialization in smoking paper was nearly absolute, although they also manufactured writing paper. Like its competitors, it maintained a strong focus on exports from the outset. In 1879 the company created the first link in its foreign distribution network: a warehouse in Havana established by Pau Miquel i Costas, brother to the company founders, which it used to distribute paper to South American countries. In 1910 other headquarters were established in Chile, Mexico and Argentina. Miquel y Costas based its production system on solid technical experience, the result of having specialized in paper manufacturing for over two centuries. The company operated on the basis of mill leases and did not own any property until well into the 20th century. The company managed the mills by means of the traditional system. This involved granting control of the mill’s production to a mill manager, called a balaire, who received the raw materials and the money to pay workers’ salaries. Very often the mill manager had a family connection with the company. This system gave Miquel y Costas great flexibility, and by the end of the 19th century the company controlled about a dozen mills, placing it in a leading position in the papermaking market. This type of organization did not change until 1914. At that time the company, already called Miquel y Costas & Miquel (MCM), acquired its first factory: the former Papelera Barcelonesa mill in Santa Coloma de Gramenet, which was equipped with a continuous production machine and was specialized in manufacturing smoking paper. This acquisition marked the end of manual paper manufacturing and gave the company a considerable boost: in 1929 it became the second largest paper manufacturing company in terms of capital, behind La Papelera Española. Miquel y Costas also had agencies in Cuba, Chile, Mexico, Argentina, the Philippines and the United States, as well as a series of commission agents working throughout South America. The company also began a vertical integration process, marked by the acquisition in 1913 of a workshop dedicated to manufacturing spools. It also diversified its activity and started selling other products such as wine, oil, cocoa, coffee, tobacco and salt. Up until 1920 the paper manufacturing company exported nearly its entire production. From that point forward it began establishing a certain presence in the Spanish market with the introduction of its new smoking paper brand, Smoking. During the Spanish Civil War (1936–1939) the company was collectivized and lost its export markets. It started its recovery and the consolidation of new markets after 1940, despite the difficulties in sourcing raw materials. On the other hand, social changes were reflected in the creation and development of new product lines – such as printing paper, Bible paper or base paper for industrial use. The company thus aimed to diversify the range of products on offer and maximize its lightweight paper manufacturing knowledge. Moreover, between 1940 and 1965 the company increased its share capital on several occasions. In 1966, in order to maintain the rate of the business’s expansion, the company opened up to external capital, 10% of which came from the Banco Exterior de España. Shortly thereafter, in 1975, Miquel y Costas & Miquel (MCM) merged with its direct competitor, Payá Miralles Corporation, based in Alcoi. Following this agreement, and given the need for modernization, the paper mill took a big leap in 1978 and started trading on the stock market through the open outcry system. In 1996 the company launched its initial public offering, which marked its entrance into the new Spanish continuous market. Over the years the company acquired other papermaking industry companies and established a subsidiary in Argentina by purchasing the Papeleras Reunidas de Buenos Aires branch in 1985, which became Miquel y Costas Argentina, S.A. (corporation). In the early 1990s the Miquel y Costas group participated in the creation of MB Papeles Especiales by purchasing 50% of its share capital. This purchase was completed in 2002, when the papermaking group acquired all of the company’s capital. Through this operation, the group strengthened its position as a manufacturer of fine and special papers; in 1996 the company controlled 5% of the world’s smoking paper production and was the fourth manufacturer of this type of paper worldwide. In 2003 a technological-industrial consultancy company was created, Miquel y Costas Tecnologías, S.A. The Miquel y Costas Group currently comprises 13 subsidiary companies and one partner company, connected to the papermaking industry and ranging from marketing to services. The parent company is Miquel y Costas & Miquel (MCM). The group is chaired by Jorge Mercader Miró. The company’s main business is still manufacturing fine and specialty lightweight paper, specifically cigarette paper, smoking paper packets, printing paper, specialty papers and textile pastes.

source: https://fibac.es/wp-content/uploads/2023/08/100-families-EN.pdf ; pages 127-130

This is the link of the book:

source: https://fibac.es/wp-content/uploads/2023/08/100-families-EN.pdf

As of 31.12.2023 the shareholders with significant interest (direct + indirect) is as follows:

source: https://miquelycostas.com/wp-content/uploads/2024/05/ING-IAGC-2023-2024-05-07-a-vigente-en-pw.pdf

The company is definitely an international operation: