DSM to acquire Fortitech to strengthen human nutrition business

Royal DSM, the global Life Sciences and Materials Sciences company, announced today that it has entered into a definitive agreement to acquire Fortitech, Inc. (Fortitech) in an all cash transaction for a total enterprise value of USD 634 million (about €495 million). Subject to customary conditions, the transaction is expected to close before the end of the year.

Fortitech, a privately held company with 520 employees, and based in Schenectady (New York, USA) is a leader in customised, value-added food ingredient blends for food & beverage, infant nutrition and dietary supplements industries. It has six production sites located in New York and California (US), Campinas (Brazil), Kuala Lumpur (Malaysia), Gastrup (Denmark) and Poznan (Poland), with sales offices in China and Mexico.

Net sales for 2013 are expected to be about USD 270 million with an EBITDA of about USD 70 million, including synergies and excluding exceptional items, resulting in an EV/EBITDA multiple of about 9.

DSM has identified attractive cost synergies at about 10% of net sales, which will be fully realised by 2015. In addition, one-time synergies – primarily capital expenditure avoidance – are estimated at USD 70 million. DSM expects the transaction to be EPS accretive in the first year after closing.

Strategic rationale

Customers especially in the food and beverage industry are increasingly looking for solutions providers offering a broad range of food ingredient blends that cover a more comprehensive portfolio of ingredients, sometimes even requesting the complete formula, for a given product. DSM's Human Nutrition and Health (HNH) premix business is a channel to market primarily for its own nutritional ingredients.

JUNIOR