Degussa ingredients sale in 'final negotiations'

By Lindsey Partos

- Last updated on GMT

Related tags Degussa Flavor

German chemical group Degussa is in the final stages of talks to
shed its food ingredients unit, says chief financial officer
Heinz-Joachim Wagner.

Speaking recently at the firm's first half results conference, Wagner told analysts he could not comment on whether "there will be a book loss or book gain on the sale of the food ingredients business, because we are in the final negotiations."

Citing insufficient leverage to match the performance of larger commercial players, at the end of last year Degussa​, Germany's third largest chemical company, announced plans to divest the food ingredients arm of its business, that pulled in sales of €527 million in 2003, generating a small slice of overall revenues for the group that peaked at €11.4 billion last year.

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

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 supplies flavours, texturants and bioactive units under the its performance materials division. Flavouring systems target the food, dairy and beverage markets while the texturant arm supplies formulations based on hydrocolloids, blends and lecithins.

In June number four flavours and fragrance group Symrise announced it was heading into the second round of bidding for the food chemicals arm of Degussa, together in 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 bids for 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.

Degussa confirmed to this week that further information on the deal is expected on 8 November, at the firm's third quarter results conference.

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