DSM acquires HMO firm Glycom in €765m deal

By Will Chu

- Last updated on GMT


Related tags Dsm Glycom HMO

Royal DSM has reached agreement to acquire Danish Human Milk Oligosaccharide (HMO) supplier Glycom in a deal worth €765m.

In a statement the Dutch multinational now intends to offer HMO-based products to the early life nutrition industry adding to its portfolio of Docosahexaenoic acid (DHA) and arachidonic acid (ARA) - fatty acids found in breast milk.

“We are looking forward to welcoming Glycom to DSM,”​ says Geraldine Matchett and Dimitri de Vreeze, Co-CEOs of Royal DSM.

“Our companies have a great fit together, with a shared passion for purpose-led and science-based solutions in Nutrition & Health.

“This acquisition is an attractive and logical next step for DSM enabling us to provide our customers with innovative Early Life Nutrition solutions in our Human Nutrition business.”

The acquisition of Glycom, which is owned by the founders, Nestlé, Danica and various individual investors, is expected to complete in Q2 2020. In 2011, Nestlé made an equity investment of €200m to own a 36.3% share in the firm.

According to DSM, the deal represents an EV/EBITDA multiple of 20.6x based on the 2019 reported EBITDA, and around 15x based on the estimated 2021 EBITDA.

Contribution to DSM’s Earnings Per Share (EPS) is expected to be €0.10 – 0.15 in 2021.

Nestlé interests

Glycom reported sales of €74m in 2019, predominantly generated by its partnership with fellow HMO producer Nestlé, which DSM says will continue to be an important customer in the future.

“The Nestlé contract is a mutually beneficial long-term contract with committed volumes also covering the mid-term horizon,”​ DSM said in a recent presentation to Investors.

With the acquisition, DSM now adds HMOs to its ELN portfolio currently consisting of ARA/DHA, vitamins and customised nutrient premixes. In 2019, the business recorded €0.5bn in sales in the segment.

Glycom, headquartered in Hørsholm, Denmark – north of Copenhagen, was founded in 2005 and currently has around 150 employees.

It remains the only fully integrated HMO provider in the world with its own product development, preclinical and clinical development, regulatory and large-scale production facilities.

Its HMO product portfolio includes EU-approved Glycare, 2FL and Glycare LNnT for use in foods including infant nutrition and consumer health products. The firm is expected to launch four additional HMOs during 2020.

‘DSM a great home for Glycom’

“We are excited to join DSM,”​ says Odd Hansen, CEO of Glycom. “This enables us to accelerate the growth of Glycom by adding our HMO products to DSM’s broad global customer base and integrate it in its full solutions offering for Infant Nutrition customers.

“It also creates leverage with DSM’s strong R&D platform and clinical competencies to support development of Glycom’s next generation HMO’s. DSM is a real great home for Glycom to reach its full potential.”

With the acquisition, DSM bolsters its position in the crowded ELN market valued at €48bn globally that includes, Nestlé, Friesland Campina, Danone Abbott, Mean Johnson and Yili.

DSM expect the HMO market, currently valued at €100m, to quadruple in the coming five years, driven by large ELN producers adopting HMOs and HMO-based product launches in non-infant nutrition markets such as dietary supplements, medical nutrition and pet care.

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