Symrise Enters Exclusive Discussions to Acquire Diana Group for EUR1.3 Billion
14 Apr 2014 --- Symrise AG has submitted a binding offer and has entered into exclusive discussions with the owners of Diana Group with regards to the acquisition of Diana Group, one of the most attractive assets in the flavor and nutrition space. This move will make Symrise the third largest flavor supplier in the world with EUR2.3 billion turnover.
Bernhard Kott, Head of Corporate Communications at Symrise told FoodIngredientsFirst that there are four key rationales behind the move, with the main reason being the chance to enter a completely different segment: pet food. Kott said: “with Diana's focus on naturalness and sustainability, they totally fit in our agenda. They operate in the pet food business, where we do not have a significant presence so far. This is 60% of their overall business. This is for us a product diversification.”
This also allows the company to supply existing customers, with pet food operations. “The large FMCG companies, are also the customers on the pet food side, so we have a much deeper and diversified access to these larger FMCG customers," Kott adds.
Finally, Kott sees complementary capabilities and opportunities for international expansion of the Diana portfolio. "Through the technologies they operate in such as extraction, hydration and concentration and the capabilities we operate in are highly complementary. The R&D power that Symrise has in new molecules, compounding and application, will benefit Diana. Finally, we are a truly global company [50% in emerging markets], which is an infrastructure that can be used by Diana.”
With the planned transaction, Symrise will significantly expand its position in the Flavor & Nutrition market, strengthen its backward integration and expand its activities into the highly attractive Pet Food market. The investment amounts to EUR 1.3 billion, for which Symrise has already secured the required bridge financing. The final financing structure will comprise of debt and equity. The acquisition is expected to be fully EPS accretive from 2015 onwards. In 2013, Diana had sales of ca. EUR 425 million and an EBITDA margin of ca. 21 %. The proposed transaction is subject to consultation with the worker’s council and to antitrust clearance.
The Diana acquisition is currently desribed as “exclusive negotiations,” but Kott stressed that this wording is merely a technicality as: “this deal is done.” “We have to get the anti-trust clearance, which takes 3-4 months. But they are not a competitor for us, as we even use them as a supplier, so there is pretty much no overlap. In France, you specifically need to talk to the unions, but this is just a process and will not stop the transaction. We expect it to be done mid-year,” he explains.
As the partner of choice for its clients in the Food, Pet Food, Nutraceuticals, Aquaculture and Cosmetics industries, Diana has become one of the leading suppliers of organoleptic solutions based on natural ingredients. Diana is a world leader in natural and functional food solutions and palatability enhancers for pet food and works alongside its clients to increase the sensorial and nutritional performance of their products. Diana is headquartered in Vannes, France, and operates own production facilities and sales offices in 23 countries in Europe, North and Latin America as well as Asia. With more than 2,000 employees, the company generated sales of ca. EUR 425 million and an EBITDA margin of ca. 21 % in 2013.
Dr Heinz Jürgen Bertram, Chief Executive Officer of Symrise AG, commented: “The proposed acquisition represents a major milestone for Symrise right after our 10th anniversary, and is fully in line with our strategic objective to further accelerate profitable growth. Diana Group is an impressive and highly profitable business with a strong complementary fit to our activities in the Flavor & Nutrition market. With Diana we will be able to significantly diversify our portfolio for natural ingredients, tap into new business segments, strengthen our raw material supply and meet the requests for traceability from our customers. The planned integration of Diana will create an unparalleled set-up which will offer us new opportunities for profitable growth beyond our current market and establish an excellent position to generate value in the future. We believe that a multiple of around 14 x EBITDA (2013) represents an attractive valuation given the quality of Diana’s product and customer base, its high margin characteristics, and the future growth prospects of the business.”
The joint activities of Diana and Symrise generate pro forma sales of nearly EUR 2.3 billion with an EBITDA margin of more than 20 %. The acquisition will create a unique and highly competitive platform which will allow Symrise to capitalize on market opportunities at an accelerated pace, intensify business with global key accounts and consumer goods companies and gain additional market share.
With its global network and the particularly strong footprint in Emerging Markets, Symrise will enhance Diana’s regional presence in key growth regions. In addition, Diana will benefit from Symrise’s strong R&D capabilities in flavors, consumer health and life essentials, which will advance innovations in these key business segments.
“We are proud to have accompanied Diana and its management team for the last seven years, which have seen the company transform into a world leader in natural food solutions and palatability enhancers for Pet Food. As a globally leading F&F company, Symrise is an ideal owner for Diana to continue developing and growing its business”, said Philippe Poletti, Head of Mid Markets Enterprise Capital, Senior Managing Director Ardian.
by Robin Wyers
