Royal DSM to acquire food ingredient blends producer Fortitech

Royal DSM, a life sciences and materials sciences firm based in the Netherlands, has entered into an agreement to acquire Fortitech, a US-based provider of food ingredient blends, for $634m in cash.

Fortitech, a privately-held company based in New York, 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 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 the acquisition, which is in line with its plan to become a full solutions provider in food ingredient blends, will expand its value chain presence and business capabilities.

DSM Nutritional Products president and CEO Leendert Staal said the acquisition will not only enable the company to offer customised food ingredient premixes and blends to customers, but will also expand its international footprint.

"Fortitech will become an important part of the Human Nutrition and Health business within DSM Nutritional Products," Staal added.

DSM expects the transaction to be earnings per share accretive in the first year after the closure of the deal, which is likely to occur by the end of 2012.

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, the company said.

This deal will mark DSM’s ninth acquisition in the nutritional segment since it announced its corporate strategy to focus on growth in September 2010.

DSM said that since 2010, it 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.