Chr. Hansen to Consider Adding Culture Factory in Asia

Chr. Hansen A/S (CHR) Chief Financial Officer Klaus Pedersen said the world’s largest maker of bacteria cultures for dairy products will consider adding a factory in Asia as Chinese demand increases.

The company is increasing the capacity of one of its main plants in Denmark, adding a floor of fermentation tanks at the site as the complex is currently running at full capacity. Chr. Hansen is monitoring the market for potential acquisitions and later will consider an Asian plant if demand and transportation costs warrant it, Pedersen said in an interview.

“Once we have been running Copenhagen for a few years, then we will look to establish ourselves in Asia Pacific,” the executive said. He added that no decision has been taken yet on the matter.

With about 45 percent of the dairy-cultures market, the Danish company is looking to fend off its nearest competitor, DuPont Co. (DD), which spent more than $7 billion on buying local rival Danisco in 2011. Chr. Hansen is forecasting sales growth of 8 percent to 10 percent this year as demand rises in China and the Americas, Pedersen said.

Chr. Hansen has culture factories in Denmark, France and the U.S., with origins dating back more than 100 years. The company has product-development and sales offices elsewhere. Asia Pacific and the Middle East accounted for 17 percent of Hansen’s sales last fiscal year, according to data compiled by Bloomberg.

Competitive Market

The dominant bacteria culture makers are being challenged by smaller companies that have made inroads into the industry by developing their own enzyme technologies, including Dyadic International Inc. (DYAI), which has an alliance with a unit of Sanofi.

Chr. Hansen, founded in the 1870s by chemist Christian Hansen, joins Bagsvaerd, Denmark-based Novozymes A/S (NZYMB) in looking to expand manufacturing worldwide. The country’s emergence as a leader in developing strains of bacteria and proteins stems from the nation’s agricultural past, coupled with a prominent pharmaceutical industry.

Novozymes, the world’s biggest enzyme maker, is considering an enzyme plant in Brazil dedicated to the emerging biofuel industry there, it said on Jan. 21.

Foundation company Novo A/S, in which Novo Nordisk is a main shareholder, owns stakes in both Chr. Hansen and Novozymes. Novo’s managing partner, Soren Carlsen, who holds a master of science degree in biochemistry and brewing technology, sits on the boards of Chr. Hansen and Novozymes.

M&A Ambitions

PAI Partners sold a 26 percent stake in Chr. Hansen to Novo for about $714 million a year ago.

Chr. Hansen’s own ambitions for mergers and acquisitions are focused on adjacent technologies, and there is no plan to expand in a different area, Pedersen said.

“There are a number of possibilities under consideration,” which could include areas such as coffee, crop protection and animal health, where cultures can be used to improve feed uptake, Pedersen said. A developing industry for the next decade could be advanced probiotics that would assist in human diseases of the gut.

To contact the reporter on this story: Andrew Noel in London at anoel@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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