Firmenich Acquisition: Key Details, Impact, and What Comes Next

The merger of DSM and Firmenich to form DSM-Firmenich AG marks a significant milestone in the nutrition, beauty, and well-being sectors. This strategic union combines the strengths of both companies, creating a leading entity poised to drive innovation and growth. With nearly 30,000 employees and a combined revenue exceeding €12 billion, DSM-Firmenich is set to become a major player in the industry.

What Is Firmenich?

Founded over 150 years ago, Firmenich specializes in perfumery, beauty, taste, texture, health, and animal nutrition. Its core products include perfumery and beauty ingredients, dietary supplements, and solutions for healthier livestock. Firmenich stands out in the market through its strong emphasis on innovation, sustainability, and scientific research, with over 2,000 scientists tackling global challenges. The company also boasts a significant global presence with approximately 30,000 employees and a combined revenue exceeding €12 billion.

Who Acquired Firmenich?

DSM is a global leader in health, nutrition, and bioscience, renowned for its innovative solutions in these fields. The company offers a diverse range of products, including dietary supplements, biomedical solutions, and animal nutrition. With a strong emphasis on sustainability and scientific research, DSM has established itself as a key player in the industry. Its significant market presence is bolstered by a global team of approximately 30,000 employees and a combined revenue exceeding €12 billion.

When Was Firmenich Acquired?

DSM completed its acquisition of Firmenich on May 9, 2023. This merger aligns with industry trends emphasizing sustainability, innovation, and strategic consolidation. The timing reflects a broader movement towards creating entities that can leverage scientific advancements to meet evolving consumer demands in nutrition, beauty, and well-being. The new entity, DSM-Firmenich, aims to lead in these sectors by combining the strengths and legacies of both companies.

Why Was Firmenich Acquired?

• Market Expansion: The merger of DSM and Firmenich significantly broadens their market reach, creating a global entity with operations in nearly 60 countries and 340 sites. This extensive footprint allows DSM-Firmenich to serve a diverse range of customers across multiple regions, enhancing their influence in the nutrition, beauty, and well-being sectors.
• Technology Integration: Firmenich's proprietary technologies in biotechnology, encapsulation, and olfactory science complement DSM's expertise in bioscience and fermentation. This integration of advanced technologies enables DSM-Firmenich to offer innovative solutions and enhance their product offerings, driving scientific advancements in their core markets.
• Competitive Advantage: By combining Firmenich's strengths in fragrances and flavors with DSM's capabilities in nutrition and health, DSM-Firmenich gains a unique competitive edge. The merger creates a comprehensive provider of innovative solutions, positioning the new entity as a leader in multiple sectors and enabling it to anticipate and meet the evolving needs of conscious consumers.

Acquisition Terms

• Acquisition Price: Firmenich shareholders will receive €3.5 billion in cash.
• Payment Method: The merger was executed through a public offer for DSM shares in exchange for DSM-Firmenich shares and the contribution of Firmenich shares to DSM-Firmenich in exchange for DSM-Firmenich shares and €3.5 billion in cash.
• Key Conditions or Agreements:
  • Minimum acceptance condition of 95% of DSM's ordinary share capital, automatically reduced to 80% if a pre-wired back-end structure is approved at the DSM EGM.
  • Receipt of relevant competition clearances and expiration or termination of applicable waiting periods.
  • Clearance from relevant Dutch and Swiss financial supervision authorities.
  • Receipt of relevant foreign direct investment approvals.
  • DSM's general meeting of shareholders must approve the business combination and the repurchase and redemption of DSM cumulative preference shares A.
  • Completion of DSM's employee information and consultation obligations.
  • Euronext's approval of DSM-Firmenich's listing application.
  • No court, arbitral, or governmental ruling or regulations prohibiting the consummation of the merger in any material respect.
  • No material adverse effect or breach of warranties by DSM or Firmenich.
  • The DSM preference shares foundation must agree to cancel its call option.
  • The Offering Circular must be approved by the AFM and any other required securities regulatory authority.
  • Confirmation by Euroclear Nederland that DSM-Firmenich ordinary shares have been accepted for book-entry transfer.

Impact on Firmenich

The acquisition of Firmenich by DSM has led to significant changes in operations and management. The merger resulted in the resignation of Firmenich's directors, with new appointments including Jane Sinclair, Geraldine Matchett, and Dimitri de Vreeze to the board. The new entity, DSM-Firmenich, will operate with dual headquarters in Switzerland and the Netherlands, and will be led by co-CEOs Dimitri de Vreeze and Geraldine Matchett, although Matchett will depart on September 1, 2023, leaving de Vreeze as the sole CEO. The company is organized into four business segments: Perfumery & Beauty, Animal Nutrition & Health, Health Nutrition & Care, and Taste, Texture & Health.

The merger has also impacted product offerings and services, combining DSM’s health and nutrition portfolio with Firmenich’s perfumery and taste businesses. This integration is expected to enhance innovation and create new growth opportunities, particularly in high-growth and resilient segments. The combined entity aims to leverage world-class science and complementary capabilities in fragrance, taste, texture, and nutrition, potentially leading to an estimated annual sales uplift of around €500 million. Employee reactions have been generally positive, with the merger seen as an opportunity for career development and maintaining strong community connections. Customers are expected to benefit from the enhanced capabilities and innovation potential of the new company, which aims to better anticipate and address evolving consumer needs.

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