Firmenich is one of the major European suppliers of flavors and fragrances.
(Photo: Reuters)
Dusseldorf A new multi-billion merger is taking place in the European specialty chemicals industry. The Dutch DSM and the Swiss Firmenich Group have agreed on a merger, as the companies announced on Tuesday morning. The new group with the name DSM-Firmenich has a turnover of 11.5 billion euros.
This means that two icons of the European chemical industry are joining forces. The result is a focused manufacturer of fragrance, food, health and animal nutrition ingredients – a company fully focused on subcontracting and product development for the high-growth consumer goods and health care industries.
DSM-Firmenich is approaching the project as a merger of equals and is planning double company headquarters in Maastricht and in Kaiseraugst, Switzerland. The merger will take place via an exchange of shares for new DSM Firmenich shares. After that, the previous DSM shareholders will hold a majority of 65 percent in the new company.
Firmenich is one of the major suppliers of flavors and fragrances, such as those used in perfumes. In recent years, DSM has increasingly developed into a manufacturer of ingredients for food and health products. As part of the merger, DSM is separating from its plastics division, which is going to a joint venture between the German chemical group Lanxess and the financial investor Advent for 3.7 billion euros.
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The business areas of DSM and Firmenich are now to be further developed under one roof. The manufacturers are now not just pure molecule suppliers for consumer goods and pharmaceutical manufacturers. The specialty chemicals companies see themselves as their development partners in the creation of new products, such as health-promoting food, new types of pet food and innovative cosmetics.
New competitor for Symrise and Evonik
Several German chemical companies are also strong in this business, for which a new, powerful competitor is emerging as a result of the major Dutch-Swiss merger. This applies above all to the Dax group Symrise, which produces fragrances and flavorings as well as cosmetic raw materials and active ingredients. In financial circles it is said that DSM was initially interested in a merger with Symrise.
DSM-Firmenich will also become a strong competitor for Evonik. The Essen-based chemical group is currently focusing its portfolio on several special segments. One of them is “Nutrition & Care”, i.e. the production of ingredients for nutrition, cosmetics, pharmaceuticals and pet food.
A few years ago, Evonik itself was about to merge with DSM. In the end, however, the project failed, among other things, due to the question of the company headquarters, as it is said in industry circles.
DSM has now found what it was looking for in Switzerland for a merger partner. Firmenich is the world’s number two in flavorings and fragrances. The company has so far been fully owned by the Firmenich family, whose representative Patrick Firmenich chairs the board of directors.
The new DSM Firmenich Group will also be managed according to the Swiss model of a controlling board of directors with operationally responsible management. There, the Dutch will occupy the decisive positions. The head of the board of directors will be the previous chairman of the DSM supervisory board, Thomas Leysen, and Patrick Firmenich will be his deputy. The two CEOs of DSM, Geraldine Matchett and Dimitri de Vreeze, will serve as CEOs.
DSM-Firmenich expects medium-term sales growth of five to seven percent per year from the consumer and pharmaceutical-related businesses with a profit margin of more than twenty percent. The companies estimate the synergies from the merger at 350 million euros annually, which should be achieved in 2026.
More: Conversion at Evonik: billions invested in sustainability – partial sales planned.