DSM’s benzoic acid, sodium benzoate business cleared for sale

By Jess Halliday

- Last updated on GMT

DSM Special Products and DSM IP Assets look set to be sold to equity investor Sun Capital as the European Commission has given competition approval with no strings attached.

DSM Special Products manufactures sodium benzoate for use in foods and beverages, benzoic acid for food, personal case and pharmaceutical uses, benzyaldehyde and benzylalcohol, which have wide ranging uses including pharmaceuticals and flavours and fragrances.

The company put DSM Special Products up for sale several years ago, as it does not fit with its Vision 2010 strategy of focusing on life sciences and material sciences. In 2008 it was set to sell the division to US-based Arsenal Capital Partners, but that deal fell through as the conditions for competition approval meant the two parties decided it was no longer feasible.

Sun Capital was announced as a new suitor in August this year, as part of its Q2 results. Competition approval hinged on investigating cross-over with Emerald Kalama Chemicals, a US based company in Sun Capital’s portfolio that also makes benzoic acid, sodium benzoate, benzyl alcohol and benzaldehyde.

The Commission deemed that there are horizontal overlaps in markets covered, but that they are “not significant and are unlikely to lead to competition concerns”.

“Regarding the vertical links, the Commission concluded that the merged entity will have no or limited ability and incentives to close off the markets involved, since alternatives and credible suppliers will remain in the markets after the transaction,”​ it said.

Working towards closing

DSM spokesperson Herman Betten told FoodNavigator.com that the now-granted Commission approval, this time with no conditions attached, means that one of the main conditions of the deal is now overcome.

“Indeed we will go ahead and work towards closing,”​ he said. He could not give a time frame for signatures on the dotted line, however, as other aspects still need to be arranged, such as discussions with the workers council in Rotterdam, The Netherlands, where the business is based.

Betten said the aim it to make the transition as smooth as possible for customers.

Other divestments

DSM Special Products is one of the last divisions earmarked for sale under Vision 2010 to find its new owner. Previous divestments have been made in the areas of energy, fertilisers, melamine and licensing urea technology.

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