Novozymes, Chr. Hansen merger: ‘The combination…will show the world the true power of biosolutions’
“The combination of two strategically complementary companies with a shared purpose and advanced capabilities will show the world the true power of biosolutions,” Novozymes President and CEO Ester Baiget said as the proposal was unveiled today.
The combined business would generate an annual revenue of around €3.5bn. Revenue synergies are estimated at €200m with €80-90m in EBIT impact ‘achievable’ within four years. The companies said they expect to deliver a 29% EBIT margin by 2025, excluding integration costs and PPA amortization. The groups forecast cost synergies in the region of €80-90m, deliverable within three years after completion.
“Building on shared purpose-driven values and cultures, as well as an unquestionable business rationale, the proposed combination of these two iconic Danish companies represents a natural next step towards addressing the needs of tomorrow,” Mauricio Graber, President and CEO of Chr. Hansen, commented.
Sales growth with a focus on sustainable solutions
Alongside cost synergies, the enlarged business hopes to leverage its combined strengths to support top line gains. The transaction would capitalise on the Danish companies’ expertise and capabilities in production and R&D as well as their commercial reach to develop biological solutions to enable ‘healthier lives’, a 'more sustainable food system' and an acceleration towards carbon neutrality, Chr. Hansen and Novozymes said in a joint statement.
“We are jointly creating a leading biosolutions partner dedicated to securing a healthy planet and a more sustainable future,” Dominique Reiniche, Chair of the Chr. Hansen Board of Directors, stressed. “The combined business offers a great opportunity to pursue attractive synergies by creating new solutions for the benefit of our customers and consumers, and will create value for all our shareholders as well as for society.”
After completion, management predicted organic revenue CAGR of 6-8% through to 2025. In its recent financial update for the 12 months to end-August, Chr. Hansen booked organic sales growth of 9% and forecast 2022-3 organic revenue to fall in a range of 7-10%. Meanwhile, Novozymes said full year 2022 organic growth of 8-9% is expected when it delivers its results for the fiscal at the end of January.
According to Novozymes CEO Baiget, the deal represents ‘another step towards unlocking additional growth opportunities’. “Novzymes and Chr. Hansen share the strong conviction that our combined scale, know-how, commercial strengths and innovation excellence will drive value for our shareholders, customers and society at large by providing the sustainable solutions the work do urgently needs.”
Beyond 2025, ambition is to continue to deliver accelerated sustainable growth from the underlying business coupled with new, and de-risked, innovation and growth opportunities.
Shareholder backing for creation of ‘a global leader in biosolutions’
The Boards of Directors of Novozymes and Chr. Hansen said they both support the merger and unanimously recommend their respective shareholders to approve the deal at extraordinary general meetings, which are currently expected to be held in the first six months of 2023.
Novo Holdings, the largest shareholder in both Novozymes and Chr. Hansen, has already offered its backing. Novo Holdings said it will exchange its 22% stake in Chr. Hansen at a ratio of 1.0227, lower than the 1.5326 new B-shares being offered to Chr. Hansen's free-float shareholders. If the transaction receives final approval, Novo Holdings would hold 22% of outstanding shares, with Chr. Hansen and Novozymes free float shareholders holding 44% and 34% respectively.
“As long-term shareholders in both Novozymes and Chr. Hansen, we are in full support of the plans to combine the two companies. Due to our strong belief in the commercial, strategic, and long-term financial merits of this transaction, we are willing to accept a less favorable exchange ratio for our shares in Chr. Hansen than what is offered to other shareholders,” explained Kasim Kutay, CEO of Novo Holdings.
Lars Rebien Sørensen, Chairman of Novo Holdings, added: “The two companies are a perfect match. Chr. Hansen with its expertise in microbials and Novozymes with its background in enzymes. Combining the two companies will create a global leader in biosolutions.”