Royal DSM, a global life and material sciences company, has announced that it has acquired Fortitech, Inc., a Schenectady, NY-based ingredient blend provider, for $634 million. The transaction is subject to customary conditions and is expected to close before the end of the year.
Fortitech, which is a well-known entity in the food & beverage, infant nutrition and dietary supplement industries. The company offers customized solutions and 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 company employs approximately 520 employees and 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 were expected to be about $270 million with an EBITDA of about $70 million, including synergies and excluding exceptional items, resulting in an EV/EBITDA multiple of about nine. 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 $70 million. DSM expects the transaction to be EPS accretive in the first year after closing.
DSM said customers - especially those 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.
“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,” explained Leendert Staal, president and CEO of DSM Nutritional Products. “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.”
Fortitech will help 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. “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,” said Feike Sijbesma, CEO and chairman of the DSM managing board.“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.”