The two chemists Lanxess and DSM posted the two strongest increases in the Stoxx 600 index of the largest stocks listed in Europe. The first, German, will take over, with the support of the private equity firm Advent International, the engineering materials subsidiary of the Dutch group for an amount of 3.85 billion euros. A structuring operation in the sector and very well received on the stock market, for both parties, which is rare enough to be underlined. In Frankfurt, Lanxess jumped nearly 11% while, in Amsterdam, DSM grew by 7%.
But the “deal” of the day does not stop there. Shortly before this announcement with Lanxess, DSM had indicated its intention to merge with the Swiss manufacturer of perfumes and aromas Firmenich, valuing the company 21.6 billion euros, excluding the engineering materials activity. DSM, which specializes in health, nutrition and biosciences, specifies that, following this merger “between equals”, its shareholders would hold 65.5% of the new entity, simply called “DSM-Firmenich”, the balance capital to Firmenich shareholders.
Potential in food and drink
At the end of this operation, the management of DSM-Firmenich expects organic growth in its turnover of around 5%, before it is increased to a range of 5% to 7% in the medium term. The adjusted gross operating surplus (Ebitda) should, for its part, increase by 5% to 10% in the medium term. The combination should enable the realization of recurring pre-tax synergies of approximately €350 million on adjusted gross earnings per year by 2026.
” Firmenich is the world’s largest privately owned fragrance and flavor company. The combined company will have four divisions (all of nearly equivalent size), focusing on animal nutrition, health, fragrance and beauty, food and beverages”sums up the firm Oddo BHF, which sees above all a strong potential in the merger of the subsidiaries of the two groups in this last business, DSM Food & Beverage and Firmenich Taste & Beyond, whose profit per share should experience double-digit growth.
The merged company will remain listed in Amsterdam. The transaction is expected to be finalized in the first half of 2023 at the latest.