Degussa Selling Ingredients Business to Cargill

Specialty chemical maker Degussa has agreed to sell its food ingredients business to Cargill for $670 million. The sale must still be approved by Degussa’s supervisory board and the appropriate regulatory authorities.

The business being sold 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 ingredients market in October 2004, saying the company 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 ingredients business with annual sales of about $80 million to a private equity group.

Cargill, a privately held agribusiness concern, says the purchase is its largest acquisition since the 2002 purchase of the starch processor Cerestar. "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," Chief Executive Officer Warren Staley says.

The sale continues a chemical industry exodus from the food ingredients sector. ICI and Rhodia sold food additives 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 ingredients operation.