DSM-Firmenich is to sell its stake in the long-standing feed enzymes alliance to its equal partner, Novonesis, for €1.5bn (US$1.54bn).
Novonesis, formed through the merger of Novozymes and Chr. Hansen, will assume full control of the alliance, including sales and distribution activities.
The partnership, established more than 25 years ago, successfully developed a comprehensive feed enzymes portfolio for the animal feed market.
The DSM-Firmenich activities included in this deal generated roughly €300m in annual net sales in 2024. After transaction costs and capital gains tax, DSM-Firmenich said it expects to receive around €1.4bn in net cash.
Dimitri de Vreeze, CEO of DSM-Firmenich, echoed this sentiment, noting the remarkable success of the alliance, with it establishing a global leadership position in feed enzymes. “I am confident this business will continue to thrive under Novonesis' leadership.”
ANH business separation
The feed enzymes business is currently part of DSM-Firmenich’s Animal Nutrition & Health (ANH) unit, which is undergoing a planned separation from the group, as announced in February 2024.
As part of this transition, DSM-Firmenich and Novonesis said they reassessed their collaboration and determined that dissolving the alliance would be strategically beneficial for both companies.
Novonesis highlighted that the acquisition aligns with its growth strategy, strengthening its position in the animal biosolutions sector. The company also reaffirmed its commitment to a long-term supply relationship with DSM-Firmenich’s premix business.
Innovation drivers
Asked how full control of the feed enzyme alliance’s sales and distribution will enhance Novonesis’ ability to innovate and deliver value across the animal biosolutions value chain, Kim Müller Christensen, vice president, animal and plant biosolutions at Novonesis, told us:
“As we expand our presence to drive the full animal biosolutions value chain, now covering innovation, development, manufacturing, marketing, sales, and distribution, we will be uniquely positioned to serve both current and new feed enzyme and probiotics customers across our markets and regions. We will be able to sell animal feed and gut enzymes to non-alliance customers including those who today only buy probiotics from Novonesis. And we can sell in-house probiotics directly to previous feed alliance customers combining best-in-class solutions.”
The synergistic benefits of incorporating enzymes and probiotics into animal diets are becoming an increasingly important focus in Novonesis' discussions with customers.
“One notable example of synergy is Novonesis' strong commercial presence in the US probiotic market, where we can now cross-sell our enzyme solutions. Additionally, the alliance holds a particularly strong foothold in Latin America and Europe.”
Given that this acquisition is 100% debt-financed, what measures are in place to manage financial risk?
Müller Christensen added: “We are confident that this acquisition, with its growth potential and synergy opportunities, will accelerate our expansion in animal biosolutions while delivering highly attractive earnings. Novonesis has long been a stable, growing business with strong cash flow and earnings generation.”
DSM-Firmenich’s divestment progress
Earlier this month, DSM-Firmenich told this publication the divestment process for its ANH unit was progressing on schedule. The first half of 2024 focused on defining the transaction scope and preparing for the carve-out, while the latter half has been dedicated to developing a detailed separation blueprint and initiating key operational steps.
Now in the execution phase, DSM-Firmenich is actively separating ANH across relevant entities and functions. The company expects to enter the transaction phase soon, with the goal of finalizing its exit from the ANH business by 2025.
