Royal DSM is to acquire Fortitech for $634 million (about €495 million). Subject to customary conditions, the transaction is expected to close before the end of the year.
Fortitech specialises in customised, value added food ingredient blends for food & beverage, infant nutrition and dietary supplements industries. The company has approximately 520 employees. Fortitech has six production sites located in New York (USA), California (USA), Campinas (Brazil), Kuala Lumpur (Malaysia), Gastrup (Denmark) and Poznan (Poland), with sales offices in China and Mexico.
Net sales for 2013 are expected to be about $270 million with an EBITDA of about $70 million.
DSM said that it has identified attractive cost synergies at about 10% of net sales, which will be fully realised by 2015. In addition, one-time synergies – primarily capital expenditure avoidance– are estimated at $70 million.
According to DSM, customers - especially in the food and beverage industry - are increasingly looking for solutions providers offering a broad range of food ingredient blends that cover a more comprehensive portfolio of ingredients, sometimes even requesting the complete formula, for a given product.
DSM’s Human Nutrition and Health (HNH) premix business is a channel to market primarily for its own nutritional ingredients. The company noted that Fortitech offers customised solutions in blends with a highly responsive and flexible customer service model. Fortitech works with a broad range of externally sourced nutrients and food ingredients including vitamins, minerals, nucleotides, amino acids, herb extracts, nutraceuticals, flavors, seasonings, coluors, caffeine, proteins, sweeteners, carbohydrates and enzymes.
The acquisition of Fortitech will, said DSM, accelerate its strategy to become a full solutions provider in food ingredient blends. For DSM the acquisition of Fortitech will expand its value chain presence, while adding additional capabilities to its business.
With the acquisition of Fortitech, DSM has now announced over €2.8 billion worth of growth enhancing acquisitions in just over two years, of which €2.4 billion in its Nutrition cluster. After completion of the announced acquisitions DSM’s Nutrition cluster will on a pro forma basis realise €4.6 billion in net sales with an EBITDA-margin target in the range of 20-23% on an annual basis, resulting in stronger and more stable growth and profitability for DSM overall.
“The acquisition of Fortitech is the ninth acquisition in the Nutrition cluster since we announced our corporate strategy DSM in motion: driving focused growth in September 2010,” said Feike Sijbesma, CEO and chairman of the DSM managing board. “Again, this acquisition fully fits DSM’s strategy as we continue to create value for all stakeholders by providing innovative, sustainable solutions to the world’s greatest current and future challenges.”
