February 9, 2021

By Lynda Kiernan, Global AgInvesting Media

Bain Capital and London-based international private equity investor Cinven have agreed to acquire Lonza Specialty Ingredients in a deal that values the business at CHF4.2 billion (US$4.67 billion). 

Founded in 1897 in the Swiss Alps, Lonza is a global leader in the biotech, nutrition, and pharmaceutical markets. The company has operations across three continents with sales of CHF4.5 billion (US$5 billion) in 2020 with a CORE EBITDA of CHF 1.4 billion (US$1.57 billion) in 2020.

The company’s specialty ingredients business has 17 global manufacturing sites and 2,800 employees that provides the custom development and manufacturing of specialty composites for the food, agrochemical, aerospace, and electronics industries. 

“Today’s announcement is the result of a comprehensive and robust selection process,” said Albert, M. Baehny, chairman, Lonza. “Bain Capital and Cinven have shown they understand the value of the experience and expertise of our Specialty Ingredients employees. They presented the most compelling industrial strategy and vision for the business, they are also keen to prioritize R&D and innovation, as well as to invest in existing facilities to unlock the potential of the business.”

Lonza stated that the sale of its ingredients unit, which is expected to close in H2 2021, will free up the company to pursue its strategic goal of evolving into a pure-play leader in the healthcare industry.

“The sale of the Specialty Ingredients business will allow Lonza to focus on its position as a leading partner to the healthcare industry, and the free cash flows resulting from the sale will allow us to accelerate our strategic priorities,” said Baehny.

The flavors and ingredients space has been humming with M&A activity in recent years. Part of the pressure on the industry is coming from global commodities giants vying to reposition themselves beyond commodities, up the production chain to gain a foothold in higher margin businesses, while other companies and investors seek to capitalize upon consumer demands for flavorful, but healthy foods.

Most recently, in November 2020, commodities trader Amsterdam Commodities (Acomo) acquired Tradin, the global ingredients business of SunOpta in a deal worth $390 million. 

In May of last year Ambienta, the largest sustainability-focused private equity investor in Europe, continued to build out its natural flavors and ingredients platform Nactarome Group with the acquisition of UK-based Create Flavors. 

The year before saw Rock Capital Partners affiliate One Rock acquire specialty ingredients producer Innophos for $932 million, and in 2018, Givaudan acquired and delisted Naturex, a leader in the development of natural ingredients and solutions for the food and beverage, health, and beauty sectors, and International Flavors & Fragrances acquire Frutarom Industries in a massive $7.1 billion deal. 

– Lynda Kiernan is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, and HighQuest Group’s Oilseed & Grain News. She is also a contributor to the GAI Gazette. She can be reached at lkiernan@globalaginvesting.com.