DSM to sell its engineering materials business to Advent and Lanxes
03 Jun 2022
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Dutch bioscience and foods company DSM on Tuesday announced the sale of its engineering materials subsidiary for an enterprise value of €3.85 billion ($4.13 billion) to private equity firm Advent International and German chemicals company Lanxess.
The proposed transaction marks the conclusion of DSM’s review of strategic options for its two materials businesses and, following the agreement to sell DSM Protective Materials to Avient Corporation in April, the transformation of DSM into a focused science-based leader in health, nutrition and bioscience.
The announcement came shortly after DSM said it intended to merge with Swiss peer Firmenich.
Advent and Lanxess plan to combine DSM's engineering materials business with Lanxess' high performance materials business under a joint venture in which Advent will own a 60 per cent stake and Lanxess a 40 per cent stake.
"We are forging a strong global player in the field of high-performance plastics," said Lanxess CEO Matthias Zachert in a statement. "The portfolios, value chains and global positioning of the two businesses complement each other perfectly."
DSM has been in the process of selling its materials division since September. DSM co-chief executive Geraldine Matchett had said at a press conference early on Tuesday about the Firmenich merger she expected more news on the engineering subsidiary "soon".
The DSM engineering division manufactures high-density polyethylene thermoplastics used in food packaging to electronics.
DSM Engineering Materials represented €1.5 billion of DSM’s total annual net sales and €334 million of DSM’s total Adjusted EBITDA for 2021. DSM expects to receive about €3.5 billion net in cash following closing, after transaction costs and capital gains tax.
This will create a new global specialty materials company with the focus and investment that can drive the development of customer-focused innovation, in particular for industry’s transition to bio-based and circular solutions. The transaction will create a platform for further growth for DSM Engineering Materials and its people. Completion of the transaction, which is subject to the customary conditions and approvals, is expected in H1, 2023.
“In reviewing possible futures for DSM’s materials businesses, we have found tremendous new homes where they will be core to each new owner’s growth ambitions… We are certain Advent International and Lanxess will be good new owners in a transaction that is strategically attractive for all parties as we focus DSM on improving people’s health and well-being. DSM has a track record of successful transformation over the past half century, and we are well underway in another such moment of strategic change,” Geraldine Matchett and Dimitri de Vreeze, Co-CEOs of DSM, commented.
“At Advent International, we are very excited to contribute our deep chemical industry expertise and experience to this joint venture and we are looking forward to working with the outstanding people at DSM Engineering Materials. Together we will create a global engineering materials industry leader,” Ronald Ayles, managing partner at Advent International, said.
“With the new joint venture, we are forging a strong global player in the field of high-performance plastics… In Advent, we have a strong and reliable partner with profound experience in the chemical industry and our customer industries,” Matthias Zachert, CEO of Lanxess, stated.
Advent International, which has extensive investment experience in the global chemical sector with a proven track record in transforming companies from corporate carve-outs into industry-leading players, will be the majority owner of the newly created joint venture. Advent also fosters the growth and market position of portfolio companies through further acquisitions and organic investments.
DSM had said it considered the operations non-core as it plans to focus on health and nutrition business.
