DSM to acquire dairy solutions provider CSK for US$166m

18 Nov 2019 --- Netherlands-headquartered Royal DSM has reached an agreement to acquire a 100 percent interest in specialty dairy solutions provider Koninklijke CSK Food Enrichment (CSK) for a cash consideration of around €150 million (US$1.66 million). Subject to customary conditions, the transaction is expected to close before the end of the year. DSM is seeking to strengthen its product portfolio and application capacities in food and beverage, particularly in the complementary area of taste, texture and bio-preservation solutions for semi-hard cheeses such as Dutch heritage cheeses Gouda and Edam.

When asked about significant changes being made to CSK’s current brand and operations, DSM tells FoodIngredientsFirst, “Obviously, it is too early to say anything concrete in that direction, the transaction still needs to be closed. but in general, we believe that both companies are very complimentary as we are active in different segments of the cheese market and we are looking forward welcoming CSK’s employees into our company. We intend to keep the Ceska [cheese starter cultures] brand.”

“Our companies have a great fit together, with shared passion for dairy, dedicated staff and complementary solution portfolios. This is also a testament to DSM’s commitment to the dairy industry, which we support through our Nutrition businesses. Today’s dairy needs are constantly changing, and DSM continues to invest in enabling customers to keep satisfying consumer demand, helping them grow their business, while we grow ours in line with our purpose-led, performance-driven strategy,” explains Patrick Niels, DSM Food Specialties President.

In 2018, CSK generated net sales of €65 million (US$71.9 million) with approximately 180 employees, around 150 of whom are based in the Netherlands.

The transaction will include CSK’s state-of-the-art dairy application center in the heart of the Netherlands’ “Food Valley,” in Wageningen. In addition, it will bring its high-tech fermentation facility in Leeuwarden, the Netherlands, into DSM’s global manufacturing network, providing additional production capacity for a range of products, located in the “strategically important” European region.

Dairy is notably DSM’s single largest segment in food and beverages. With the expansion, the company hopes to broaden its portfolio of related offerings and solutions, towards delivering differentiating and sustainable end products. The integration of DSM’s dairy business with CSK is positioned as an integral response to “fast-growing and attractive” dairy culture markets.

The two companies share a long history of serving food and beverage markets, with deep roots in the Netherlands. CSK has a track record of Dutch heritage semi-hard cheese cultures of more than 100 years since its foundation in 1905. This year, DSM celebrated 150 years of fermentation and biotechnology innovation at its site in Delft.

Innovations by DSM and CSK in the space of dairy cultures were featured in a recent FoodIngredientsFirst Special Report, which spotlights scientific advancements prolonging the shelf life of ambient products, for ease of storage and on-the-go consumption.

Business highlights at DSM
DSM outlined favorable results in the first half-year of 2019. The Dutch multinational reported group sales up by 3 percent year-on-year and adjusted EBITDA up 12 percent (including 3 percent from IFRS 16).

Total net profit for H1 2019 was €401 million (US$443.5 million), up versus the H1 2018 value of €633 million (US$700 million) when correcting the temporary vitamin price effect of €275 million (US$304.1 million) EBITDA, which followed an exceptional supply disruption in the industry. Adjusted Net Operating Free Cash Flow H1 2019 was €257 million (US$284.2 million), up 14 percent year-on-year.

Last week, Avansya, the joint venture (JV) between DSM and Cargill, began production at the first commercial-scale fermentation facility for EverSweet stevia sweeteners in the US. This comes as sugar reduction remains a key theme in food and beverage formulation, global consumers increasingly demand healthier alternatives and manufacturers avoiding sugar taxes.

In October, the company celebrated the 65th year since its discovery of the fermentation-based compound natamycin, which continues to enjoy growth across a broad spectrum of shelf-life extension solutions. The preservative is utilized by DSM across a range of its products, which are used to extend the shelf-life of a wide variety of dairy, baking and beverage offerings. FoodIngredientsFirst spoke to Ingrid Damen, Business Manager of Shelf Life Solutions at DSM, to shed light on the compound’s roots in history and its contemporary applications.

By Benjamin Ferrer