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Symrise bid for Degussa reaches second round

27-Jun-2005

Number four flavours and fragrance group Symrise heads into the second round of bidding for the food chemicals arm of German group Degussa, reports Lindsey Partos.

Symrise is bidding for the division as a consortium with its owner, Swedish private equity firm EQT.

Gerold Linzbach, chairman of the management board at Symrise, told the Financial Times Deutschland that while Symrise is bidding for the area of flavours, EQT is making a bid for texturants.

EQT, that acquired flavour firms Haarmann & Reimer and Dragoco in 2002 to form Symrise, indicated shortly after these acquisitions its interest in taking over the Degussa flavourings division.

Citing insufficient leverage to match the performance of larger commercial players, Degussa, Germany's third largest chemical company, last year announced the sale of its food ingredients arm.

Degussa told FoodNavigator.com at the time that the food ingredients division is "too small to be able to attain a leading market position on its own".

The food ingredients business pulled in sales of €527 million in 2003, generating a small slice of overall revenues for the group that peaked €11.4 billion last year.

The unit, that includes flavours, food thickeners and health ingredients, has already started to be broken up. Earlier this year Degussa shrugged off its fruit preparation business, that pulled in €64 million in sales last year, to private US firm Speyside Equity for an undisclosed price.

The German chemicals company recently reorganised its food ingredients activities to group the flavours, texturants and bioactive units under the its performance materials division. The flavouring systems target the food, dairy and beverage markets while the texturant arm supplies formulations based on hydrocolloids, blends and lecithins.

Degussa is also a key player in health ingredients, such as phospholipids and amino acids, and one of the main European suppliers along with DSM of creatine, an ingredient enjoying decent growth on the back of the burgeoning sports nutrition market. These products are sold under the bioactives unit, recently absorbed into the texturant arm.

The texturant unit at Degussa could interest a number of top tier global suppliers of hydrocolloids like xanthan, pectin and carrageenan - all in Degussa's portfolio - including FMC Corporation, acquisitive Irish firm Kerry Group, Danisco and even US firm JM Huber, which last year bought the number one pectin player, CP Kelco.

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