Street View: DSM's Firmenich deal to birth new ingredients 'superpower'

Koninklijke DSM NV

31/05/2022 09:22

** Shares in DSM  DSMN.AS  leap over 7%, on course for their
best day in more than two years, after the Dutch specialty
chemicals maker said it would merge with Swiss perfumes group
Firmenich  urn:newsml:reuters.com:*:nL1N2XN07F
    ** DSM shareholders would own 65.5% of the new Dutch-Swiss
group, while current owners of Firmenich will own the rest of
the shares and will receive 3.5 bln euros ($3.8 bln) in cash
    ** DSM separately announced the 3.9 bln euro sale of its
engineering materials unit to private equity firm Advent
International and German chemicals company Lanxess  LXSG.DE  (up
around 10%)  urn:newsml:reuters.com:*:nL8N2XN1NG
   
    'WILDEST DREAMS'
    ** "Never in our wildest dreams," says ING, hailing a
transformational M&A that could create the world's No.2 in
flavours and fragrances, and "for very little premium to boot!"
    ** "DSM and Firmenich are merging to create an ingredients
superpower," says Citi, hailing the 5-7% combined growth target
as one of the "more ambitious targets" across its peer group
    ** More large scale consolidation raises the stakes for
narrower, more specialised peers, warns Citi, as customers turn
to bigger, more integrated rivals to improve supply chains and
cut costs 
    ** The flavours and fragrances market is already
significantly consolidated, says Jefferies, with the top five
players controlling more than 75% of the market share
    ** Jefferies says this, alongside the planned sale of its
materials business, marks DSM's final shift in becoming a
pure-play nutrition business, predicting limited antitrust
issues
    ** "We welcome the strategic transformation," adds KBC,
nodding at what it calls significant synergy targets, a broad
product offering and solid market positions 
    ** Credit Suisse, however, flags a "relatively full" price
tag, although the deal should allow DSM to substantially improve
the quality of its nutrition portfolio

 (Reporting by Sarah Morland)
 ((sarah.morland@tr.com
mailto:sarah.morland@thomsonreuters.com))