DSM seeks boost from dietary supplements deal

Fri May 18, 2012 5:33am EDT
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By Sara Webb

AMSTERDAM (Reuters) - Dutch food and chemicals firm DSM (DSMN.AS: Quote) is buying the world's biggest producer of a fish oil extract believed to boost brain power for about 420 million euros ($534 million), as it targets parts of the food sector resistant to economic swings.

DSM, which has sold off much of its cyclical bulk chemicals business in recent years to turn itself into the world's largest vitamins maker, said on Friday it was buying Ocean Nutrition Canada (ONC) in an all-cash deal.

Halifax, Nova Scotia-based ONC produces Omega-3 fatty acids derived from fish oil that are used in dietary supplements and in the food and drink sectors, and are believed to help improve memory performance and relieve depression.

"The body of scientific evidence on the health benefits of Omega-3 is ever-expanding and consumer awareness of these health benefits is very strong in the United Kingdom, the United States, European countries and even in China," said Stephan Tanda, the executive responsible for DSM's nutrition business.

"That gives us high confidence that consumers will increasingly consume Omega-3," Tanda told reporters, adding that he uses the products himself.

Analysts said the deal complemented DSM's acquisition of U.S. foods ingredients maker Martek in February 2011 and would help to boost its nutrition and food business, which DSM expects to achieve annual sales of about 4 billion euros in 2013.

"Martek produces algae-based polyunsaturated fatty acids versus the fish-oil derived products from Nutrition Canada. These products mainly serve different market segments with different pricing levels," said KBC Securities analyst Wim Hoste in a research note.

"DSM has not quantified potential synergies but expects them to be substantial. These synergies should come from an enlarged distribution, marketing, product development perspective as well as some operational efficiency improvements," he added.   Continued...