Dive Brief:
- Biotechnology companies Novozymes and Chr. Hansen will merge, creating another global ingredients giant. Novozymes will pay about 87.1 billion kronor ($12.3 billion) for Chr. Hansen, Bloomberg reported. The deal is expected to close in the fourth quarter of 2023 at the earliest.
- The two publicly traded Danish companies have the same largest shareholder, life science investor Novo Holdings. Leaders from the companies and Novo Holdings said the merger will bring together Novozyme’s expertise in enzymes and Chr. Hansen’s capabilities in natural microbials. The new company will rename itself when the merger is complete.
- The ingredients sector has seen several large deals in the last few years, consolidating the market into fewer large global players but also widening the toolkit for each company.
Dive Insight:
There have been several mega-mergers in the food ingredients space in recent years as companies want to add to their capabilities and reach. This latest deal between Novozymes and Chr. Hansen doesn’t just create a huge player in the ingredients space, but it would also be the largest merger in Danish history.
The new company would occupy an outsized place in the biotech ingredients market. The combined company is expected to have annual revenues of 3.5 billion euros ($3.72 billion). It also will have 38 R&D and application centers around the world, 23 global manufacturing sites and more than 10,000 employees.
While both Novozymes and Chr. Hansen work in industries other than food ingredients, about half of the combined company’s portfolio will be focused on “enabling healthier lives and producing better foods,” the statement announcing the merger said.
The new company will retain Novozymes’s current top leadership, with Novozymes CEO Ester Baiget continuing in the top role and Novozymes CFO Lars Green heading up the finances.
The business will have deep expertise in enzymes for processing of meat, fruits and juices, bakery and alcoholic beverages from Novozymes. It will be able to provide an array of natural cultures for yogurts, cheeses and food preservation from the Chr. Hansen side.
While this company cannot do everything food industry clients need in the way of ingredients, it will be a one-stop-shop for natural chemical processes to enhance the taste, performance, nutritional benefits and shelf life of a variety of offerings.
In recent years, Chr. Hansen has been slimming down its company, perhaps in preparation for this kind of acquisition. Most notably, it sold its natural colors unit, now known as Oterra, to private equity firm EQT IX for 800 million euros ($940 million) in 2020.
This is the second sizable merger of ingredient companies announced this year.
In June, Dutch chemicals giant Royal DSM announced it was merging with Swiss ingredients maker Firmenich, bringing together DSM’s texturizing and dairy ingredients and Firmenich’s plant-based ingredients and sugar reduction options. The $21 billion deal is still pending and is expected to close in the first half of 2023.
But the largest recent deal in the ingredients space was the 2021 merger of International Flavors & Fragrances and the former DuPont Nutrition & Biosciences. The $26.2 billion deal created a huge clearinghouse for all kinds of ingredients and food tech solutions. IFF is still working on integrating the former DuPont businesses.
