Taste and fragrance group Firmenich signs merger with DSM global health and nutrition business
Firmenich's recently opened Studio Guangzhou facilities. Pic Firmenich
Health and nutrition group DSM has confirmed a merger agreement with global flavours, fragrances and ingredients company, Firmenich, combining their sector disciplines, which include applications within confectionery, to become DSM-Firmenich, writes Neill Barston.
Terms for the deal, which will merge multi-billion international operations have not been revealed, yet the businesses revealed that the newly forged entity will have four high-performing and complementary businesses, each with leading positions and underpinned by world-class science.
DSM-Firmenich will benefit from complementary capabilities across fragrance, taste, texture and nutrition, fuelled by world-class science. The company said its combined capabilities will enable it to better anticipate and to address the needs of an ever-growing demand for health-focused ranges.
As the businesses added, the merger will further accelerate innovation for the industry and generate new growth opportunities for customers. It will form a new global-scale partner to serve the food and beverage industry, combining DSM’s Food & Beverage and Firmenich’s Taste & Beyond businesses. Firmenich (its recently opened Studio Guangzhou lab facilities pictured), has a history in the sector dating back to the 1890s. Its global Perfumery and Ingredients business will expand further into Beauty through the addition of DSM’s Personal Care & Aroma business.
These new combined businesses will be joined by DSM’s high-performing Health, Nutrition & Care and Animal Nutrition & Health businesses. The combined company’s extensive global footprint will provide customers with access to an unprecedented network of R&D, creation and application capabilities, informed by local consumer preferences, across regional and local hubs around the world.
Both businesses have successful track records of investing in and delivering ground-breaking innovations that create and reshape markets. Opportunities from new pioneering and complementary digitally powered business models will build upon the 125+ year heritages of each company in purpose led scientific discovery and innovation.
DSM-Firmenich will bring together both companies’ relentless commitment to sustainability across the value chain, and in doing so help to drive environmental, social and governance leadership globally. Sustainability considerations have long been embedded within both companies’ strategies and DSM-Firmenich combines two companies with shared values and longstanding action on climate change, embracing nature and care for people. The compelling strategic rationale for this combination is reflected in the attractive synergy potential, resulting in double-digit EPS accretion1 and an enhanced strategic position across the markets in which the new business will operate.
Thomas Leysen, Chairman of the DSM Supervisory Board, commented: “DSM-Firmenich will bring together leading creativity and cutting-edge science and innovation. Together we will be able to better serve the needs of customers and deliver compelling growth and returns. However, 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.”
Patrick Firmenich, Chairman of Firmenich, also believed that the move would have a major positive impact for both companies in combining their strengths. He commented: “The combination of DSM and Firmenich is transformational, and brings together two culturally aligned and iconic businesses, each with Page 3 of 13 over 125 years’ heritage of innovation.
‘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.”
Geraldine Matchett and Dimitri de Vreeze, Co-CEOs of DSM, explained that the merger would bring together 28,000 passionate people with a common commitment to enable customers to realise their ambitions.
She added: “Together DSMFirmenich 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.”
The companies’ Food & Beverage /Taste & Beyond division, with combined revenues of €2.7bn, will form a global-scale partner to the food and beverage industry with extensive capabilities in taste, nutrition and functionality, providing nutritious and sustainable products that deliver unique and superior consumer experiences.
Notably, the new business will lead the diet transformation in creating healthier, great-tasting, accessible food and beverages with more natural and sustainable ingredients, including market and innovation leadership in naturals and clean label products; in plant-based foods; and in supporting a superior taste experience whilst enhancing food’s nutritional profile (for example with vitamins, probiotics, and lipids and reducing sugar and salt).