DSM acquires food ingredient blends provider Fortitech

Dutch life sciences and materials sciences firm Royal DSM has completed the acquisition of Fortitech, a US-based provider of food ingredient blends, for $634m in cash.

The acquisition follows an agreement signed between both parties in November and is part of DSM’s strategy to become a full solutions provider in food ingredient blends.

DSM noted that the purchase of Fortitech, which will become part of the company’s Human Nutrition and Health business, strengthens its value chain presence and capabilities.

With the completion of the deal, about 520 Fortitech employees will join DSM.

DSM managing board chairman and CEO Feike Sijbesma said that the acquisition of Fortitech is the company’s ninth acquisition in the Nutrition cluster since it announced its corporate strategy – DSM in motion: driving focused growth – in September 2010.

"These acquisitions will contribute to the current and future growth of our attractive portfolio in health, nutrition and materials, resulting in stronger and more stable growth and profitability for DSM overall," Sijbesma added.

DSM plans to appoint a dedicated team to facilitate the full-scale integration of both businesses.

Fortitech is a privately-held company that offers food ingredient blends for food and beverage, dietary supplement, and infant nutrition industries.

The company has two production facilities in the US and four facilities in Brazil, Malaysia, Denmark, Poland, with sales offices located in China and Mexico.

For the financial year 2013, Fortitech is expected to report net sales of $270m and an EBITDA of about $70m.

DSM said that cost synergies from the transaction are estimated at 10% of net sales, which will be fully realised by 2015, while one-time synergies are estimated at $70m.

Since 2010, DSM has invested a total of €2.8bn in acquisitions, which includes nearly €2.4bn in the nutrition category.

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Image: The acquisition of Fortitech is part of DSM’s strategy to become a full solutions provider in food ingredient blends. Photo courtesy of Royal DSM.