June 6, 2022

By Lynda Kiernan-Stone, Global AgInvesting Media

Following an announcement last year by Royal DSM that it planned to divest its materials division to re-focus its energies on the production of sustainable food and health products, the Dutch specialty chemical ingredients leader is merging with Swiss peer Firmenich to create DSM-Firmenich in a deal that values DSM at €21.6 billion (US$23 billion). 

In a statement, the companies expressed that this merger of equals will “create a powerhouse in innovation and creativity”. The new entity will be a Swiss-domiciled company listed on Euronext Amsterdam that will have dual headquarters in Kaiseraugst, Switzerland, and Maastricht, Netherlands.

The resulting business will have four main units:

Food & Beverage/Taste & Beyond: With combined revenues of €2.7 billion (US$2.9 billion), this unit will be a global-scale partner to the food and beverage industry with vast capabilities in taste, nutrition, and functionality. It will lead in diet transformation with more natural and sustainable ingredients, and will be a market and innovation leader in the development of natural and clean label products in the plant-based foods category and beyond. 

Animal Nutrition & Health: With revenues of €3.3 billion (US$3.5 billion), this unit will focus on speciality science-and-technology-driven solutions to meet climbing demand for protein such as meat, eggs, dairy, and fish by making animal farming radically more sustainable  by empowering farmers with essential inputs such as vitamins, enzymes, etc. 

Health, Nutrition & Care: With revenues of €2.2 billion (US$2.35 billion), this unit will continue its development as an end-to-end partner providing customized solutions that support human health at every life stage by providing a broad portfolio of sustainable, science-backed dietary supplements, early-life nutrition products, pharmaceuticals, medical nutrition products, nutrition for the under-nourished, and medical devices.

Perfume & Beauty: With combined revenues of €3.3 billion (US$3.5 billion), this unit will be the foremost creator of positive fragrances and beauty products that have renewable, natural, proprietary biodegradable, and biotechnology-derived ingredients. 

“The combination of DSM and Firmenich is transformational, and brings together two culturally aligned and iconic businesses, each with over 125 years’ heritage of innovation,” said Patrick Firmenich, chairman, Firmenich. “Our shared purpose and common values, combined with our highly complementary capabilities gives me confidence we can accelerate our growth further through innovation and new creations. I am confident that for all stakeholders of the future DSM-Firmenich business, the most exciting times are still to come.”

The newly formed DSM-Firmenich will control a portfolio of more than 16,000 patents across approximately 2,600 patent families. Together with its extensive global footprint, the company will have an unprecedented network of R&D, creation, and application capabilities that spans regional and local hubs around the world.

“DSM-Firmenich will bring together leading creativity and cutting-edge science and innovation,” said Thomas Leysen, chairman, DSM Supervisory Board. “Together we will be able to better serve the needs of customers and deliver compelling growth and returns.”

However,” Leysen continued, “successful mergers require more than complementary capabilities or compelling financials; they not only require balanced governance and a respect of the interests of all stakeholders, but they crucially require shared values. My colleagues and I are convinced we have all of those elements, and it is for this reason that the Supervisory Board of DSM concluded that this is truly a merger which is in the interest of all stakeholders.”

Each of the four new business divisions will be supported by world-class science and technological expertise built over each company’s 125-plus-year history. Their shared purpose, common valued, and complementary capabilities will continue to generate scientific advancements across its network of 15 global R&D facilities with significant cross-beneficial opportunities in bioscience, fermentation, green chemistry, receptor biology, sensory perception, and formulation, augmented by analytical sciences, data sciences, and AI.

“We are honored to propose the combination of DSM and Firmenich, and the opportunity to bring together 28,000 passionate people with a common commitment to enable our customers to realize their ambitions as we better the health and well-being of people and the planet,” said Geraldine Matchett, and Dimitri de Vreeze, co-CEOs, DSM.

“Together DSM-Firmenich will enjoy complementary capabilities, including one of the largest creation communities in the industry, enabling us to unlock new opportunities for customers as well as position us to deliver enhanced long-term growth and shareholder value, sustainably. By coming together, we will establish a company where anyone, anywhere in the world, wishing to make a positive impact should aspire to work.”

Under the structure of the deal, DSM shareholders will own 65.5 percent of the new combined group. Current Firmenich owners will hold the balance of the shares, and will also receive €3.5 billion (US$3.76 billion) in cash.

The group’s Board of Directors will comprise three nominees from among Firmenich shareholders, seven independent directors from DSM’s Supervisory Board, one independent director from the existing Firmenich Board, and one new independent member. 

Thomas Leysen, the current chairman of the DSM Supervisory Board, will be appointed chairman of DSM-Firmenich, while Patrick Firmenich, the current chairman of Firmenich, will be appointed vice-chairman.

Geraldine Matchett and Dimitri de Vreese, the current co-CEO’s of DSM, will continue in their roles as co-CEOs of DSM-Firmenich, while Emmanuel Butstraen, the current president of Taste & Beyond at Firmenich, will be appointed chief integration officer for the new group.

“This is the natural next step in Firmenich’s evolution,” said Gilbert Ghostine, CEO, Firmenich. “We are excited to build on Firmenich’s tradition of entrepreneurial excellence and create a global leader that will be able to bring breakthrough innovation and technologies to our customers, addressing the most pressing needs of consumers.”

Ghostine continued, “DSM shares our purpose-led values and, like us, creates value for its customers through its science-based approach and pioneering technologies, making a real difference to people and planet. I am excited that the legacy of Firmenich will shape a new industry leader that will innovate for a better world.”

~ Lynda Kiernan-Stone is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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