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Cargill, DSM Said to Bid in $2.6 Billion Sale of Provimi

Cargill, DSM Said to Bid in $2.6 Billion Sale of Provimi
Provimi SA has received takeover bids from Cargill Inc. and Royal DSM NV. Photographer: Noah Friedman-Rudovsky/Bloomberg

Provimi SA, a French maker of animal feed owned by Permira Advisers LLP, received takeover bids from Cargill Inc. and Royal DSM NV in a sale that may fetch more than 1.8 billion euros ($2.6 billion), said people with knowledge of the matter.

Dutch animal-feed maker Nutreco NV and China’s New Hope Group Co. are also among companies that made offers before a deadline this week, said two of the people, who declined to be identified because the details are private. Final bids are due around the end of next month and some potential buyers may team up to bid, the people said.

Permira, based in London, bought Provimi in 2007 from private equity rivals CVC Capital Partners Ltd. and PAI Partners. As well as attracting food companies, the asset is of interest to chemical makers like DSM as they diversify away from more cyclical markets toward more technology-based enzymes and products destined for consumer products.

“Nutreco had talks with Provimi before, so this is like a second chance for them,” said Jos Versteeg, an analyst at Theodoor Gilissen Bankiers NV. “DSM is likely interested in the premix part and maybe they would buy the whole company and sell the animal-food part, which fits better with Nutreco.”

Nutreco, based in Amersfoort, dropped 1.2 percent to 49.58 euros in Amsterdam trading as of 9:32 a.m. Heerlen, Netherlands-based DSM fell 1.3 percent to 44.29 euros.

Optional Purchase

While acquiring Provimi would be an attractive move for Nutreco, it is not a necessity, said Richard Withagen, an analyst at SNS Securities. Given Nutreco management’s financial discipline, a deal is “less likely than some may assume,” and there are other ways to pursue growth, he said in a May 31 note.

The company a year ago purchased a Vietnamese fishfeed business with 18 million euros in sales and in February announced the takeover of a Chinese rival for about $54 million. It formed a global animal-nutrition division to boost savings against a backdrop of rising raw-material prices.

On April 21, it forecast first-half earnings in line with the year-earlier period and said it will look to make acquisitions to expand in feed additives.

DSM Chief Financial Officer Rolf-Dieter Schwalb said in a May 13 interview that there would be no pause in takeovers after the $1.09 billion-euro purchase of Martek Biosciences Corp., a U.S. supplier of Omega 3 and baby food ingredients. Integration of that business is “going well,” he said.

Cargill Scours Globe

Provimi employs about 7,000 people in 26 countries, according to its website. It has annual sales of 1.6 billion euros from nutrition and health products for farm animals including poultry, swine and cattle.

“Cargill’s policy is not to comment on market rumors,” Lisa Clemens, a spokeswoman for the Minneapolis-based company, said in an e-mailed response to a request for comment. “At any given time, we are looking at opportunities globally.”

Yvonne Derkse, a spokeswoman for Nutreco, wasn’t immediately available when contacted outside normal office hours. Calls to the main telephone number for New Hope Group’s corporate headquarters weren’t immediately answered. A spokeswoman for Permira and a spokesman for DSM declined to comment.

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