DSM Will Acquire Ocean Nutrition

Dutch chemical maker DSM will spend about $530 million to acquire Ocean Nutrition Canada, which calls itself the world’s largest supplier of omega-3 fatty acids to the dietary supplement and food manufacturing markets.

DSM says the acquisition is the fifth purchase it has made in the nutrition field since September 2010, when it announced a corporate strategy to expand in the health, nutrition, and industrial materials markets. The largest of these deals was last year’s $1.1 billion purchase of Martek Biosciences, a producer of nutritional fatty acids via algal fermentation.

Founded in 1997, Ocean Nutrition derives the omega-3 fatty acids eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA) from oil obtained mostly from anchovies. DSM expects the firm to have sales this year of $185 million.

DSM says the purchase will strengthen its newly created nutritional lipids business by adding fish-oil-derived fatty acids to Martek’s fermentation-derived DHA and arachidonic acid. Although Martek and Ocean Nutrition both offer DHA, DSM says the fish-oil and fermentation products are sold at different prices and don’t compete. Fatty acids are marketed as good for human eye, brain, and heart health.

German chemical giant BASF is also pursuing the nutritional fatty acids market. Earlier this month it acquired Equateq, a Scottish producer of highly concentrated EPA and DHA extracted from marine, algal, and botanical sources. And late last year BASF’s plant science unit signed an agreement with Cargill to codevelop a new version of canola oil containing EPA and DHA.

Both DSM and BASF are going after what they say is a fast-growing market for omega-3 fatty acids in nutrition and, increasingly, food products. Ocean Nutrition, for example, has averaged nearly 20% annual growth for the past five years, according to DSM.

In a 2011 report, the market research company Packaged Facts said omega-3 enrichment of foods started slowly in 2003 because of taste and shelf-life problems. “Now that many of these technology hurdles have been overcome, more categories of products have become viable candidates for fortification,” the firm concluded.