what kind of reverie will the marriage of two food ingredients giants bring to the industry?
On May 31, 2022, DSM, the world’s leading food additive manufacturer, and fenmeiyi, the world’s largest essence company, announced that they had reached a business merger agreement (BCA). In the future, the two sides will set sail again with a new attitude of DSM Firmenich, and will establish an industry-leading innovative cooperation relationship in the fields of nutrition, beauty and health.
It is disclosed that the merger of the two sides is expected to achieve double-digit earnings per share growth, and will greatly enhance DSM Firmenich’s market strategic position. It is reported that DSM shareholders have majority control (65.5%) of the new company after the merger, while Finnish Meiyi shareholders will own the remaining 34.5% of the shares and receive 3.5 billion euros (about 3.8 billion dollars) in cash. This is the largest transaction in the global food sector since IFF purchased DuPont nutrition business with us $26.2 billion in 2019. The merger is expected to be completed in the first half of 2023. The new company will set up dual headquarters in Switzerland and the Netherlands and be listed on the Amsterdam Euronext.
This new industry giant will create a healthier, delicious and accessible eating experience with more natural and sustainable ingredients, including establishing an innovative leading position in the natural food and clean label products market, continuing to promote plant-based food, and committed to providing “excellent taste experience” for consumers.
DSM Firmenich predicts that by 2026, the annual sales of the combined company will increase by 5% to 7%, the adjusted EBITDA (profit before interest, tax, depreciation and amortization) is about 2.2 billion euros, and the annual revenue is expected to increase by about 500million euros. After the integration of DSM’s food and beverage business and femme’s taste&beyond business, the total value will reach 2.7 billion euros, which is expected to generate huge synergy.
In terms of personnel adjustment, DSM Firmenich will have an excellent leadership team composed of outstanding talents in various disciplines to highlight its strategy, diversity and professionalism. Thomas Leysen, the current chairman of DSM’s supervisory board, will be appointed as the chairman, and Patrick Firmenich, the current chairman of Fannie Mae, will be appointed as the vice chairman. Geraldine Matchett and Dimitri de vreeze, the current joint chief executives of DSM, will be appointed as joint chief executives of the new company (as chief financial officer and chief operating officer respectively).
DSM has been committed to improving the health of human beings, animals and even the earth through its strong scientific research strength during its more than 150 years of development, and continues to be active in the fields of nutrition, health and bioscience. In this merger, the essence business, the world-class technology platform and strong creativity led by the industry, will form a new force that can shake the whole industry and further consolidate the leading position in the industry with DSM’s excellent health and nutrition product portfolio and solid professional team.
After the merger, DSM and finmeiyi will continue to provide users with sincere and creative product applications in the global market, regularly collect market research information from around the world, timely capture the changes in local consumers’ preferences, and escort the global users’ consumption experience. It is understood that the new company after the merger will have four highly efficient and complementary businesses, spanning three major sectors: Food and beverage, personal beauty care and nutritional health. Each business will be based on the world’s top technology to ensure that it provides highly innovative and leading products and services.
Thomas Leysen, chairman of DSM’s board of supervisors, said that DSM and fenmeiyi will bring together the leading creativity and cutting-edge science and innovation capabilities of both sides to better meet customer needs and achieve remarkable growth returns. A successful merger requires not only complementary capabilities or good revenue, but also balanced corporate governance and respect for the interests of all relevant partners, as well as consistent values. This merger is undoubtedly the best decision in line with the development of both parties.
In recent years, DSM has been developing the plant-based industry. Through the development of a series of plant-based ingredients with excellent performance, it has become an important promoter of the industry innovation tide. Last September, DSM launched canolapro, a functional plant protein isolate, which has high solubility, high digestibility and complete amino acid composition, providing more possibilities for innovation of plant-based sports nutrition / weight management products; At the beginning of this year, DSM also developed a pure flavor solution maxavor fish Ye. The product is extracted from algae oil, which can improve the expressiveness of plant-based fish meat in flavor and taste. More than products, the acquisition of vestkorn milling, a leading European bean producer, with 65million euros at the end of last year helped DSM take a solid step towards becoming a global leader in bean raw materials.
As one of the top enterprises in the global essence industry, fenmeiyi not only continues to consolidate its leading position in the industry through a variety of ways, such as opening a fragrance creation experience center in Guangzhou last September; In early May this year, it obtained the majority equity of its strategic partner Hangzhou Ansai Biotechnology Co., Ltd. by increasing its shareholding; And also showed great interest in developing plant-based food solutions. The most typical product was the launch of dynanome from May to June last year ® Sr and dynanome ® TR is designed to provide natural, authentic and mouth watering cooking aroma for various vegetable meat products.
The complementarity of basic businesses and similar development directions in the plant-based field make this merger more logical. Patrick Firmenich, chairman of Finnish Meiyi, said that the merger of DSM and Finnish Meiyi is transformative. It brings together two iconic enterprises with the same culture. Both companies have more than 100 years of innovation tradition, the same goals and values, and highly complementary capabilities. It is believed that they will lead fenmeiyi to continue innovation and accelerate growth.
Geraldine Matchett and Dimitri de vreeze, the joint chief executives of DSM, also said: DSM Firmenich will effectively integrate the resources of both sides, build the largest innovative R & D platform in the industry, provide better services to users and expand the long-term earnings and shareholder value of the enterprise. Gilbert ghostine, CEO of fenmeiyi, added that on the basis of fenmeiyi’s outstanding product strength, the merged DSM Firmenich will strive to become a global leader who can bring breakthrough innovative technologies to users, create value for customers through pioneering technologies, and bring real changes to mankind and the earth.
Bloomberg News believes that DSM has truly completed the transformation from a chemical company to a consumer goods enterprise through this merger. DSM was established in 1902 as a state-owned mining company. With the end of the mining industry in the 1960s, it turned to the manufacturing of large-scale petrochemical products, and entered the field of biotechnology through the acquisition of GIST brocades at the end of the 20th century. Last September, DSM re integrated its business and sold its materials department, focusing more on the production of food and health care products. DSM’s transformation has become more and more steady. Analysts from stifel, an investment consulting firm, said: this transaction will create a new giant in the nutrition field, and it is the only giant that combines essence and nutritional value.
M & A and integration are normal events in the development of giant enterprises. Every “vertical and horizontal cooperation” between food giants has brought great changes to the industry and market restructuring. On the one hand, the strong are united in advantageous fields, forming an invincible situation of “the strong are always strong”; On the other hand, it creates new opportunities for other enterprises to survive and grow through the adjustment and simplification of business lines. Foodaily believes that, compared with the traditional ingredients such as nutrition enhancement and flavor release, the new giant’s product layout in the field of plant-based ingredients and the strategic idea of “diet transformation” created through the complete ingredient system will have a lasting positive impact on the entire food industry.
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