DSM exits bakery business for EUR197m

DSM has sold its bakery ingredients business to private equity Gilde for EUR 197.5 million, as the Dutch giant focuses on value added ingredients.

13/04/05 DSM has sold its bakery ingredients business to private equity Gilde for EUR 197.5 million, as the Dutch giant focuses on value added ingredients. The transaction will include all activities of the business group DSM Bakery Ingredients, with the exception of the business unit Baking Enzymes, which was transferred to DSM Food Specialties in 2004, and DSM Bakery Ingredients’ stake in a joint venture in South Africa (Rymco).

DSM has been increasing the focus of its food ingredients strategy on products that provide other functionalities for some years (e.g. health enhancing, adding nutritional value) rather than those provided by DSM Bakery Ingredients. This is demonstrated by the acquisition in 2003 of DSM Nutritional Products and the new products developed by DSM Food Specialties. These trends limit the operational and technological synergies between DSM Bakery Ingredients and the core of DSM’s food and nutrition businesses.
At the same time the business characteristics of the markets in which DSM Bakery Ingredients operates are changing in terms of market growth potential and competitive intensity. In view of this, DSM announced early in quarter 3 last year that it would carry out a strategic study to investigate the various business scenarios and strategic options for this business. The study concluded that divestment of the business could be the best option to allow the bakery ingredients business to grow and develop itself further.

DSM and Gilde expect to close the transaction in the course of Q3 2005, subject to certain standard regulatory approvals. The transaction is now being submitted for advice to DSM’s central works council and for consultation to the applicable trade unions, according to standard legal procedures.