24 Apr Symrise’s $1.8bn Diana deal helps close gap on rivals

German flavours and fragrances group, Symrise, is to buy France’s Diana Group for an agreed €1.3 billion including debt to narrow the gap on top rivals Givaudan, Firmenich and International Flavors & Fragrances and expand in natural ingredients and pet food.

The company has entered into exclusive talks with owner Paris-based buyout firm Ardian Sarl, formerly known as Axa Private Equity. A deal is expected to be completed in the third quarter, Holzminden, Germany-based Symrise said in a statement. It expects the acquisition to be earnings accretive from 2015.

CEO Heinz-Juergen Bertram is seizing the opportunity to acquire one of a limited number of larger targets in the flavours and fragrance industry to accelerate its growth and access natural raw materials. 

The combined business will have pro-forma sales of nearly €2.3 billion, Symrise said. Market leader, Givaudan of Switzerland, generated the equivalent of €3.6 billion in sales last year, according to Bloomberg data.

“The proposed acquisition represents a major milestone for Symrise right after our 10th anniversary, and is fully in line with our strategic objective to further accelerate profitable growth,” Bertram said.

Bertram said Vannes-based Diana’s strength in processing natural products would also help meet Symrise’s target to address the growing demand for traceability of its products.

Diana is one of the world’s leading providers of natural extracts from fruits, vegetables, fish, meat, wine and vinegar and is the global leader in palatability enhancers for pet food.

The Diana Group’s offering spans food additives based on natural vegetable and animal-based products and colourings used in beverages, sweets and sauces. It’s expanded into the nutraceutical market, where nutrition and ingredients are formulated to try to prevent and combat diseases. Last month, Diana agreed to collaborate on cancer research with the Oregon Translational Research and Development Institute, providing expertise on plant cell cultures.

Symrise has sought growth partly via acquisitions, for example the global fragrance business of New York-based Belmay Group last year, and boosting its stake in Swedish probiotics company, Probi, last month, and has also pursued a strategy of increasing control over its own supply chain.

For instance, it has plans to set up a new production plant for vanilla extraction in the remote jungles of Madagascar this year and to expand capacity for its flavours and nutrition business in Shanghai next year.

While the flavours and fragrance industry is dominated by four leaders, mentioned above, Bloomberg reports that another forthcoming opportunity is Wild Flavors. Owner Hans-Peter Wild and buyout firm KKR & Co, it says, are known to be exploring strategic options including its sale.