DSM takes over Swiss Firmenich in shares and cash deal – Marketscreener.com
DSM said on Tuesday that its shareholders will take 65.5% of the shares in a new group called DSM-Firmenich, while the owners of unlisted Firmenich will receive a 34.5% stake of the combined entity plus 3.5 billion euros in cash from DSM.
In a back-to-back deal that concludes DSM’s exit from industrial materials, DSM also agreed to sell its engineering plastics division to German peer Lanxess and private-equity firm Advent for 3.85 billion euros ($4.14 billion) including assume debt.
Markets cheered the transaction with DSM shares surging 9.4% to a four-week high and Lanxess stock jumping 13.1% to a three-month high.
“We’re bringing together two iconic companies, where DSM is strong in health and nutrition, and Firmenich is very strong in fragrances and taste,” said DSM co-Chief Executive Dmitry de Vreeze.
“That creates solutions where we have health, sustainability, and tastes and flavour as being key for the future.”
DSM and Firmenich said the merged group, expected to be created in the first half of next year, could see organic sales growth of 5% to 7% per year, while realising annual cost savings of 350 million euros.
DSM said last September that it would sell its two industrial materials units to focus purely on ingredients for food and health products.
Sales of its nutrition division, which produces goods ranging from vitamins and other supplements to baby formula and animal feed, rose 10% to 7 billion euros last year. DSM’s total sales were 9.2 billion euros in 2021.
Firmenich reported sales of 4.5 billion Swiss franc ($4.7 billion) last year. Both companies realised an adjusted core profit margin (EBITDA) of around 20%.
The new company will have dual headquarters in Kaiseraugst near Basel, Switzerland, and in the Dutch city of Maastricht. Its legal domicile will be in Switzerland but the shares will be listed on the Euronext Amsterdam exchange.
The merger will be effected through a public offer of DSM shares, in which current DSM shareholders can exchange their share for a share in the new company.
Lanxess and Advent said in a separate statement they formed a joint venture to acquire DSM’s Engineering Materials business, a maker of plastics for car parts, for 3.7 billion euros including assumed debt.
DSM last month said it had agreed to sell its protective materials business, part of the materials division for sale, to Avient Corp for $1.48 billion.
($1 = 0.9305 euros)
(Reporting by Bart Meijer, Toby Sterling and Ludwig Burger; Additional reporting by Mike Shields; Editing by Kim Coghill and Susan Fenton)