Royal DSM nutrition deal aids slow motion breakup

Corbion NV

03/09/2021 11:22

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are their own.)
    LONDON, Sept 3 (Reuters Breakingviews) - Dutch Royal DSM https://www.breakingviews.com/considered-view/dsms-two-new-heads-stretch-sustainability-halo/?bved=OQ%3D%3D&bvshr=MTY2NDcx
  RDSa.L  is slow-cooking a transformation. The 30 billion euro
chemicals company is buying First Choice Ingredients https://www.dsm.com/corporate/news/news-archive/2021/29-21-dsm-to-acquire-first-choice-ingredients-to-accelerate-growth-in-food-and-beverage.html,
 valuing the dairy-based savoury flavourings business at $453
million, including debt. That’s almost 20 times an estimated
adjusted 2021 EBITDA, in line with peer Corbion  CORB.AS . The
U.S. company flogs enzymes and cultures-based flavourings – an
idea likely to be popular with proponents of “clean” food.
    It also helps DSM’s efforts to focus on nutrition while
slowly cutting materials, which contributed around a fifth of
net sales in the first half, from its diet. Last year the
company sold its resins and functional materials businesses to
Covestro  1COV.DE  for 1.6 billion euros. This makes sense.
Stuff like thermoplastics has limited synergies with
perishables. Industry leader Givaudan  GIVN.S  trades at almost
30 times forward EBITDA compared to DSM’s 17 times, according to
Refinitiv. Finalising its breakup could boost DSM’s valuation.
(By Dasha Afanasieva)
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 (Editing by George Hay and Katrina Hamlin)
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