Commission Clears Proposed Acquisition of DSM Special Products by Equity Investor Sun Capital

DSP and DSM IP are part of DSM Netherlands, both are wholly owned subsidiaries of Royal DSM. DSP produces benzaldehyde, benzoic acid, benzyl alcohol, and sodium benzoate. DSM IP is the owner of certain intellectual property rights.

3 Dec 2010 --- The European Commission has approved under the EU Merger Regulation the proposed acquisition of DSM Special Products (DSP) and DSM IP Assets (DSM IP) of The Netherlands by Sun Capital Partners of the US. After examining the operation, the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

Sun Capital Partners Inc. is a private equity investment firm. One of its portfolio companies controls Emerald Kalama Chemicals, a US based company active in the production of benzoic acid, sodium benzoate, benzyl alcohol and benzaldehyde. Kalama also produces derivates of some of these chemicals as well as certain other fatty aldehydes (downstream products). These products are used in a variety of applications, such as food, pharmaceutical, healthcare or agrochemical applications.

DSP and DSM IP are part of DSM Netherlands, both are wholly owned subsidiaries of Royal DSM. DSP produces benzaldehyde, benzoic acid, benzyl alcohol, and sodium benzoate. DSM IP is the owner of certain intellectual property rights.

The proposed transaction results in horizontal overlaps on the markets for benzoic acid, sodium benzoate benzaldehyde and benzyl alcohol. In addition there are a number of vertically affected markets. The first occurs between the upstream market for benzoic acid and the markets for potassium benzoate, benzyl benzoate and benzoate plasticizers downstream. The second occurs between the upstream market for benzaldehyde and its downstream derivatives, i.e. amyl and hexyl cinnamic aldehyde, methyl cinnamic aldehyde and cinnamic aldehyde, mainly used in flavour and flagrance industries.

The Commission’s examination of the proposed transaction showed that the horizontal overlaps between the parties' activities are not significant and are unlikely to lead to competition concerns. Regarding the vertical links, the Commission concluded that the merged entity will have no or limited ability and incentives to close off the markets involved, since alternatives and credible suppliers will remain in the markets after the transaction.

The Commission therefore concluded that the proposed acquisition would not raise competition concerns.

The transaction was notified to the Commission on 26th October.