DSM-Firmenich nutrition and beauty mega-merger edges closer as companies announce Exchange Offer

23 Nov 2022 --- Dutch health and nutrition multinational DSM and privately-owned Swiss fragrance and flavor leader Firmenich are launching an exchange offer as part of their merger to create DSM-Firmenich. The companies jointly announced on Tuesday morning that the Dutch Authority for Financial Markets had approved the Offering Circular, enabling the formal launch of the Exchange Offer. 

An exchange offer is a form of tender offer in which securities are offered as consideration instead of cash. The new global company will be domiciled in Switzerland and listed on Euronext Amsterdam.

The merger – first announced in May – will combine Firmenich’s leading Perfumery and Taste businesses, world-class science platforms and associated co-creation capabilities with DSM’s Health and Nutrition portfolio and renowned scientific expertise. The combination will reportedly make DSM-Firmenich the world’s largest nutrition, fragrance, beauty and well-being supplier in the world with revenues exceeding €11 billion (US$11.35 billion).

The new company will have four high-performing and complementary businesses: Perfumery & Beauty, Food & Beverage/Taste & Beyond, Health, Nutrition & Care and Animal Nutrition & Health, each with strong market positions and expertise to address emerging consumer trends. The businesses will also prioritize environmental sustainability, health and well-being.

Geraldine Matchett and Dimitri de Vreeze, DSM’s Co-CEOs, explain: “DSM-Firmenich is set to become the leading creation and innovation partner in nutrition, beauty and well-being, capable of delivering enhanced growth and shareholder value creation through strong growth synergies, as well as an enhanced customer offering and an even greater positive impact across the world.”

Gilbert Ghostine, Firmenich’s CEO, adds: “DSM-Firmenich will be a global-scale partner, uniquely positioned to anticipate and better address the evolving needs of consumers by unlocking opportunities for our customers and our people.”DSM-Firmenich will consist of four complementary businesses, including Animal Nutrition & Health.

The announcement’s key takeaways
The Exchange Offer Acceptance Period began at 09:00 CET today and expires at 17:40 CET on January 31, 2023, unless extended. DSM’s managing and supervisory boards unanimously support the transactions and recommend the Exchange Offer to DSM’s Shareholders for acceptance.

DSM will host an extraordinary general meeting on January 23, 2023, during which the transactions, including the Exchange Offer, will be discussed, and its shareholders will be requested to vote in favor of approving the transactions. The transactions are expected to be completed in Q1 2023.

Meanwhile, Firmenich’s board of directors also unanimously supports and recommends the transactions. Its shareholders have already approved the transactions.

Under the Exchange Offer, DSM’s shareholders will be entitled – subject to certain terms and conditions – to exchange each DSM Ordinary Share they hold for one newly issued DSM-Firmenich Ordinary Share.

Following the transfer of the DSM Ordinary Shares, all issued and outstanding ordinary shares in the capital of Firmenich will be contributed to the new company against payment of an amount in cash and the issuance of DSM-Firmenich Ordinary Shares to establish DSM-Firmenich.

Separately, Firmenich has announced its Q1 results for the three months ending September 30, 2022. The company generated revenue of CHF 1,246 million (US$1,307.3 million), an increase of 11.6% at constant currency, driven by a balanced contribution of volume/mix and pricing, partially offset by FX and generated an Adjusted EBITDA of CHF 237 million (US$248.6) million.DSM recently decreased its 2022 profit outlook amid energy and raw material costs rises in Europe.

Method in the merger
The merging companies indicate that their successful track records of investing in and delivering ground-breaking innovations that create and reshape growth markets will be combined in DSM-Firmenich. The new company will operate at “the highest safety and quality standards” and maintain regional manufacturing.

DSM-Firmenich will be well-positioned to accelerate growth by addressing shifts in consumer preferences and customer needs driven by global trends such as climate change, accessible nutrition, inequalities and hygiene and sanitation.

As a market leader with enhanced creation and application capabilities, DSM-Firmenich will be able to serve both global and local customers, informed by local consumer preferences, across regional and local hubs around the world.

Earlier this month, DSM lowered its 2022 profit outlook after energy and raw material costs rose in Europe in the third quarter. Reuters reported that the group expected EBITDA from continuing operations to grow by a low-single-digit percentage this year, against a previous forecast of high-single-digit growth.

Meanwhile, the company is increasing its focus on food ingredients and health products markets. It is preparing to showcase plant-based innovations, functional F&B and sustainability advancements at Food Ingredients Europe (FIE) 2022 in Paris, France (Dec 6-8).

By Joshua Poole

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