DSM to merge with Swiss perfume and taste business
Dutch industrial group DSM is on track to complete its transition into a nutrition, beauty and health conglomerate after agreeing to merge with the world’s largest privately held taste and perfumery business.
The deal will link DSM with Swiss group Firmenich through a public one-to-one share offer plus €3.5bn in cash. DSM’s shareholders will own 65.5 per cent of DSM-Firmenich while Firmenich shareholders will have 34.5 per cent.
DSM also revealed that it has agreed to sell its engineering materials business to Advent International and Lanxess for an enterprise value of €3.85bn.
The proposed sale of its engineering materials unit concludes DSM’s strategic review for its two materials businesses and its pivot to focus on health and nutrition. The sale, announced on Tuesday, followed an agreement last month to sell its protective materials unit to Avient.
Shares in DSM took off on Tuesday in early trading, adding nearly 13 per cent in Amsterdam to trim its year’s decline to 20 per cent. The group has a market capitalisation of about €25bn.
The Dutch-Swiss group, which will combine perfumery and taste with DSM’s health and nutrition portfolio, will have a dual headquarters in Kaiseraugst in Switzerland and Maastricht in the Netherlands. Shares will be listed in Amsterdam.
DSM said the merger with Firmenich will add a potential €350mn to its adjusted earnings before interest, tax, depreciation and amortisation, including about €500mn in annual sales.
The enterprise value of DSM adjusted for the divestment of the materials business comes to €21.6bn, including net debt.
“DSM-Firmenich will bring together leading creativity and cutting-edge science and innovation,” said DSM chair Thomas Leysen. “Together we will be able to better serve the needs of customers and deliver compelling growth and returns.”
The engineering materials business accounted for €1.5bn of DSM’s annual net sales and €334mn of adjusted ebitda for 2021. DSM expects to receive about €3.5bn net in cash following closing, after transaction costs and capital gains tax.
DSM expects both deals to be completed in the first half of next year.