Dutch specialty chemicals maker DSM on Tuesday said it would merge with Swiss peer Firmenich in a deal involving shares and cash, to become a leading supplier of food ingredients and beauty and well-being products.
The companies said the merger, expected to be finalised in the first half of next year, could lead to an organic sales growth of 5% to 7% per year and annual cost savings of 350 million euros ($376.15 million).
DSM shareholders would own 65.5% of the new Dutch-Swiss group, while current owners of Firmenich will own the rest of the shares and will receive 3.5 billion euros ($3.76 billion) in cash.
DSM said last September that it would sell its materials division to focus purely on producing sustainable food and health products.
The deal with Firmenich valued DSM at 21.6 billion euros adjusted for the Materials business, the company said.
Sales of its nutrition division, which produces goods ranging from vitamins and other supplements to baby formula and animal feed, rose 10% to 7 billion euros last year. DSM's total sales were 9.2 billion euros in 2021.
Firmenich reported sales of 4.5 billion Swiss franc ($4.7 billion) last year. Both companies realised an adjusted core profit margin (EBITDA) of around 20%.
The new company will be based in Switzerland, with headquarters in Kaiseraugst and Maastricht, in the south of the Netherlands. Shares will remain listed on Euronext Amsterdam.
The merger will be effected through a public offer of DSM shares, in which current DSM shareholders can exchange their share for a share in the new company.
DSM last month said it had agreed to sell its protective materials business, part of the materials division for sale, to Avient Corp for $1.48 billion.