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Business

DSM eyes exit from traditional chemical sector

Dutch firm restructures to strengthen its position in nutrition and health

by Alex Scott
September 15, 2021 | A version of this story appeared in Volume 99, Issue 34

 

Photo of DSM's high strength, ultra-high-molecular-weight polyethylene fiber.
Credit: DSM
DSM is carving out its materials business, including its Dyneema high-strength polyethylene fiber, into a separate entity with a view to exiting the business.

The Dutch company DSM, one of the oldest names in the European chemical industry, says it may sell its materials business to focus on supplying high-value nutrition and biotech products.

The materials business posted sales in 2020 of $1.9 billion—close to 20% of DSM’s total sales—from products that include specialty nylons, biomaterials, and Dyneema super-strong ultra-high molecular weight polyethylene fiber. DSM says it doesn’t yet have a buyer for the business. In the meantime, it is carving out the business, featuring 2,857 of DSM’s 23,127 employees, into a stand-alone company.

“This is not something that is only going to take a few weeks or a couple of months, but neither do we want it to take years and years,” co-CEO Geraldine Matchett said in a conference call to analysts probing for details about a prospective sale of the business.

DSM is also splitting its nutrition business into three divisions: food and beverage, health and nutrition, and animal nutrition. Advances in digital technology and bioscience offer new opportunities across these fields, the firm says. DSM’s goal in all of the new divisions is the delivery of long-term growth by making products that are sustainable, Matchett said.

“It is a new chapter in our strategic journey,” co-CEO Dimitri de Vreeze said during the call.

The divestment is the latest in a series of changes that have transformed a company founded in 1902 by the Dutch government as Dutch State Mines to mine coal in the south of the Netherlands.

DSM went on to become the Netherlands’ major producer of petrochemicals. But as the firm began developing a business in ingredients for nutrition and health, it lost interest in commodities. DSM sold the petrochemical business to Sabic in 2002. In April, DSM completed the sale of its resins business to Covestro for $1.8 billion.

The company has been buying businesses such as Amyris’s flavor and fragrance ingredients operation and the flavor maker First Choice Ingredients, both earlier this year.

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