DSM to acquire Fortitech to strengthen human nutrition business

DSM to acquire Fortitech to strengthen human nutrition business 
HEERLEN, THE NETHERLANDS -- (Marketwire) -- 11/08/12 --    * DSM
(NYSE Euronext: DSM KON) to acquire Fortitech for total enterprise
value 
of USD 634 million (about EUR495 million) in cash 
* Fortitech expected 2013 net sales: about USD 270 million, with
EBITDA of 
about USD 70 million, including synergies and excluding
exceptional items 
* Fortitech, headquartered in the USA, is a global leader in food
ingredient 
blends for the food & beverage, infant nutrition and
dietary supplements 
industries 
* Acquisition will accelerate DSM's strategy to become a full
solutions     provider in food ingredient blends 
* Acquisition will expand DSM's value chain presence 
* Significant cost synergies estimated at 10% of net sales, fully
realized by     2015 
* One-time synergies estimated at USD 70 million, primarily capital 
expenditure avoidance 
* Value creating acquisition; EPS accretive in first year after
closing 
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
EUR495 million). Subject to customary conditions, the transaction
is
expected to close before the end of the year. 
Fortitech, a privately held company based in Schenectady (New York,
USA), is a leader in customized, value added food ingredient blends
for food & beverage,
infant nutrition and dietary supplements
industries. The company has approximately 520 employees. Fortitech
has six production sites located in New
York (USA), California (USA),
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 realized by 2015.
In addition, one-time synergies
- primarily capital expenditure avoidance- are
estimated at USD 70
million. DSM expects the transa
ction 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.
Fortitech offers customized solutions in blends with a highly
responsive and flexible customer service model. Fortitech works with
a broad
range of externally sourced nutrients and food ingredients
including  vitamins,
minerals, nucleotides, amino acids, herb
extracts, nutraceuticals, flavors, seasonings, colors, caffeine,
proteins, sweeteners, carbohydrates and enzymes. 
The acquisition of Fortitech will accelerate DSM's strategy to become
a full
solutions provider in food ingredient blends. For DSM the
acquisition of Fortitech will expand its value chain presence, while
adding additional capabilities to its business. 
Demand for food ingredient blends has grown rapidly over the past 15
years as
food & beverage, infant formula and dietary supplement
companies transition from
in-house production to external supply
partners with a number of benefits, including lower quality risk,
increased output and accelerated product development. Future global
food ingredient blends industry growth is expected to continue in the
high single digits on an annual basis driven by high growth economies
and increased outsourcing of the blending. 
With the acquisition of Fortitech DSM now has announced over EUR2.8
billion worth
of growth enhancing acquisitions in just over two years,
of which EUR2.4 billion
in its Nutrition cluster. After completion of
the announced acquisitions DSM's
Nutrition cluster will on a pro
forma basis realize EUR4.6 billion in net sales
with an EBITDA-margin
target in the range of 20-23% on an annual basis, resulting in
stronger and more stable growth and profitability for DSM
overall.
These acquisitions form an integral part of DSM's strategy
for its Nutrition
cluster and will contribute to the current and
future growth of DSM's attractive
portfolio in health, nutrition and
materials. 
Feike Sijbesma, CEO and Chairman of the DSM Managing Board, said:
"The acquisition of Fortitech is the ninth acquisition in the
Nutrition cluster since
we announced our corporate strategy DSM in
motion: driving focused growth in
September 2010. Again, this
acquisition fully fits DSM's strategy as we continue
to create value
for all stakeholders by providing innovative, sustainable solutions
to the world's greatest current and future challenges." 
Leendert Staal, President and CEO of DSM Nutritional Products,
commented: "The
acquisition of Fortitech is another very important
step towards the implementation of DSM's Nutrition strategy. It will
help us to expand our value
chain presence and to deliver more value
to our customers. With Fortitech DSM
will be able to deliver
customized food ingredient premixes and blends to our
customers while
at the same time strengthening our international footprint. Fortitech
will become an important part of the Human Nutrition and Health
business within DSM Nutritional Products. I look forward to welcoming
Fortitech's 520 employees to DSM." 
Walter S. Borisenok, President and CEO of Fortitech, said: "Our
combined global
capabilities will deliver a deeper and more
comprehensive resource for providing
our customers with innovative
customized products and services. Together we will
boast a brighter
and stronger scientific research database and unsurpassed technical
excellence that will enable us to bring superior value to our
products
and services." 
Conference calls 
Today DSM will hold a conference call for the media from 08.00 AM -
08.30 AM CET (+31 (0)10 29 44 228 or +44 (0) 203 365 3207) and a
conference call for investors and analysts from 09.00 AM - 10.00 AM
CET (+31 (0)10 29 44 271 or +44
(0) 203 365 3207). Also, more
information can be found in the presentation that
can be found on
DSM's corporate website. 
Fortitech 
Founded in 1986, Fortitech is the world leader in the development of
custom food
ingredient premixes and blends for the food and beverage,
infant nutrition and
dietary supplements industries, integrating
functional ingredients from a comprehensive selection of vitamins,
minerals, nucleotides, amino acids, herb
extracts, nutraceuticals,
flavors, seasonings, colors, caffeine, proteins, sweeteners,
carbohydrates and enzymes.  Fortitech is FS 22000 certified, with a
stringent Allergen Monitoring Program, and operates to cGMP,
GMO-free, HACCP,
Organic, Kosher and Halal standards.  Headquartered
in Schenectady, N.Y., the
company has a global network of
manufacturing and distribution facilities, throughout Europe, Asia
Pacific, South America, Mexico and the United States
(New York and
California).  For more information, visit fortitech.com. 
DSM - Bright Science. Brighter Living.(TM) 
Royal DSM is a global science-based company active in health,
nutrition and materials. By connecting its unique competences in Life
Sciences and 
Materials
Sciences DSM is driving economic prosperity,
environmental progress and social
advances to create sustainable
value for all stakeholders. DSM delivers innovative solutions that
nourish, protect and improve performance in global
markets such as
food and dietary supplements, personal care, feed, pharmaceuticals,
medical devices, automotive, paints, electrical and electronics, life
protection, alternative energy and bio-based materials. DSM's
22,000
employees deliver annual net sales of around EUR9 billion. The
company is listed on NYSE Euronext. More information can be found at
www.dsm.com. 
Press release-pdf:
http://hugin.info/130663/R/1656112/535327.pdf 
Presentation to Investors Acquisition of Fortitech-pdf: 
http://hugin.info/130663/R/1656112/535328.pdf 
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants
that: 
(i) the releases contained herein are protected by copyright and    
other applicable laws; and 
(ii) they are solely responsible for the content, accuracy and     
originality of the information contained therein. 
Source: DSM N.V.  via Thomson Reuters ONE 
[HUG#1656112] 
For more information: 
DSM Corporate Communications 
Herman Betten
tel. +31 (0) 45 5782017
e-mail media.relations@dsm.com 
DSM Investor Relations 
Dave Huizing
tel. +31 (0) 45 5782864
e-mail investor.relations@dsm.com
 
 
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