Degussa Ingredients Go to Cargill

Specialty chemical maker Degussa has agreed to sell its food ingredient business to Cargill for $670 million. The business supplies texturing, flavoring, and bioactive agents to the worldwide food industry. It had sales last year of some $545 million and employs close to 2,100 people, mostly in the U.S. and France. Degussa announced plans to exit the food ingredient market in August 2004, saying it was too small a player to become a world leader on its own. It started the divestiture process in February, when it sold a fruit ingredient business with annual sales of about $80 million to a private equity group. "This agreement marks a very significant step in Cargill's strategy of becoming a leading provider of specialty ingredients and ingredient systems to food and beverage companies globally," says Warren R. Staley, CEO of the privately held firm. The sale continues a chemical industry exodus from the food ingredient sector. ICI and Rhodia sold food additive units last year to, respectively, Kerry Group and Danisco, companies focused on the food industry. DSM sold its yeast business earlier this year, although it has vowed to keep the rest of its food ingredient operation.