Dutch ingredients and bioscience group DSM and Swiss fragrance and flavour specialist Firmenich have entered into a business combination agreement to form DSM-Firmenich in order to establish the leading creation and innovation partner in nutrition, beauty and well-being

The move is set to boost annual sales by €500 million (US$537 million), particularly by combining DSM’s Food & Beverage and Firmenich’s Taste & Beyond businesses.

The deal with Firmenich valued DSM at 21.6 billion euros adjusted for the Materials business, the company said.

Sales of its nutrition division, which produces goods ranging from vitamins and other supplements to baby formula and animal feed, rose 10% to 7 billion euros last year. DSM’s total sales were 9.2 billion euros in 2021.

Firmenich reported sales of 4.5 billion Swiss franc ($4.7 billion) last year. Both companies realised an adjusted core profit margin (EBITDA) of around 20%.

The combination will bring together Firmenich's unique leading Perfumery and Taste businesses, its world-class science platforms and associated co-creation capabilities with DSM's outstanding Health and Nutrition portfolio and renowned scientific expertise. The new company will have four high-performing and complementary businesses, each with leading positions and underpinned by world-class science.

The merger of DSM-Firmenich will further accelerate innovation for the industry and generate new growth opportunities for customers. It will form a new global-scale partner to serve the food and beverage industry, combining DSM's Food & Beverage and Firmenich's Taste & Beyond businesses.

The combined company's extensive global footprint will provide customers with access to an unprecedented network of R&D, creation and application capabilities, informed by local consumer preferences, across regional and local hubs around the world. Both businesses have successful track records of investing in and delivering ground-breaking innovations that create and reshape markets.

DSM-Firmenich will bring together both companies' relentless commitment to sustainability across the value chain, and in doing so help to drive environmental, social and governance leadership globally. Sustainability considerations have long been embedded within both companies' strategies and DSM-Firmenich combines two companies with shared values and longstanding action on climate change, embracing nature and care for people.

The compelling strategic rationale for this combination is reflected in the attractive synergy potential, resulting in double-digit EPS accretion1 and an enhanced strategic position across the markets in which DSM-Firmenich will operate.

Thomas Leysen, Chairman of the DSM Supervisory Board, commented: "DSM-Firmenich will bring together leading creativity and cutting-edge science and innovation. Together we will be able to better serve the needs of customers and deliver compelling growth and returns. However, successful mergers require more than complementary capabilities or compelling financials; they not only require balanced governance and a respect of the interests of all stakeholders, but they crucially require shared values. My colleagues and I are convinced we have all of those elements, and it is for this reason that the Supervisory Board of DSM concluded that this is truly a merger which is in the interest of all stakeholders."

Patrick Firmenich, Chairman of Firmenich, commented: "The combination of DSM and Firmenich is transformational, and brings together two culturally aligned and iconic businesses, each with over 125 years' heritage of innovation. Our shared purpose and common values, combined with our highly complementary capabilities gives me confidence we can accelerate our growth further through innovation and new creations. I am confident that for all stakeholders of the future DSM-Firmenich business, the most exciting times are still to come."

The combination of Firmenich and DSM will establish the leading creation and innovation partner in nutrition, beauty and well-being with four high-performing and complementary businesses, each with pioneering, leadership positions.