Royal DSM (Heerlen, The Netherlands) has entered into a definitive agreement to acquire Fortitech Inc. (Schenectady, N.Y.) for $634 million in cash. The transaction is expected to close before year’s end. Fortitech makes customized, value-added food ingredient blends for the food and beverage, infant nutrition, and dietary supplements industries. Net Fortitech sales in 2013 are expected to be about $270 million with an EBITDA of $70 million, resulting in an EV/EBITDA multiple of about 9. DSM said it has identified attractive cost synergies at about 10% of net sales, and one-time synergies (primarily capital expenditure avoidance) of around $70 million. Fortitech has approximately 520 employees and six production sites worldwide. DSM’s rationale for the acquisition included ingredient customers seeking one-stop shopping, and rapid growth in food ingredient blends as food and beverage, infant formula, and dietary supplement companies transition from in-house production to external supply partners. Annual growth of the global food ingredient blends industry is expected to continue in the high single digits, driven by high growth economies and increased outsourcing, DSM said. DSM is an NCN Cornerstone Investor.
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