If you have an ACS member number, please enter it here so we can link this account to your membership. (optional)

ACS values your privacy. By submitting your information, you are gaining access to C&EN and subscribing to our weekly newsletter. We use the information you provide to make your reading experience better, and we will never sell your data to third party members.


Specialty Chemicals

DSM to merge with fragrance maker Firmenich

DSM will also sell its polymer business to Lanxess for $4.1 billion

by Alex Scott , Alexander H. Tullo
June 1, 2022 | A version of this story appeared in Volume 100, Issue 20


A Firmenich site in France.
Credit: Firmenich
Firmenich has a 10% share of the global fragrance ingredients market. Its production sites include this one in southwestern France.

The Dutch chemical maker DSM is undertaking two transformational transactions. It has struck a deal to merge with the Swiss firm Firmenich to create a nutrition and personal care ingredients company worth about $43 billion. And it has agreed to exit the traditional chemical sector with the sale of its engineering polymer business to Lanxess and Advent International for $4.1 billion.

DSM-Firmenich at a glance

Sales: $13.0 billion

Pre-tax profits: $2.5 billion

Businesses (% of sales): animal nutrition (29%), perfume and beauty (28%), food and beverage (24%), health and nutrition (19%)

Employees: 28,000, of whom 2,000 are in R&D

Headquarters: Kaiseraugst, Switzerland, and Maastricht, the Netherlands.

R&D spending: $750 million

Manufacturing sites: 88

Patents held: more than 16,000

Source: DSM and Firmenich; figures are proforma for 2021

The merger, to form DSM-Firmenich, will join two companies that have been independent European manufacturers for more than a century.

DSM will bring to the new firm annual sales of $8.3 billion, pre-tax profits of about $1.6 billion, and 18,000 employees. The company was formed in 1902 by the Dutch government to mine coal under the name Dutch State Mines. DSM subsequently moved into chemical production. But it sold its petrochemical and commodity plastics business to Sabic in 2002 and last year sold its resin business to Covestro for $1.8 billion.

Privately owned Firmenich is one of the world’s largest flavor and fragrance companies, with annual sales of about $4.8 billion, pre-tax profits of about $960 million, and 10,000 employees. Some two thirds of Firmenich’s business is in fragrances, and the rest is in flavors.

At the inception of DSM-Firmenich, DSM shareholders will own 65.5% of the combined company and Firmenich shareholders 34.5%. DSM-Firmenich will pay $3.75 billion for a portion of Firmenich’s shares owned by the Firmenich family.

DSM’s joint CEOs Geraldine Matchett and Dimitri de Vreeze will run the combined firm. DSM’s chair Thomas Leysen will continue in his role at the new company, and Patrick Firmenich will be vice chair of the board.

The merged company will be “an unparalleled leader” in its field, de Vreeze said during a briefing for journalists. The company will seek to grow through innovation, he said, a goal underpinned by an annual R&D budget of more than $750 million.

DSM and Firmenich expect the merger to cost about $270 million to complete but bring annual cost savings of about $375 million by 2026.

After completion, sales will increase 5-7% annually as a result of “accelerating innovation with customers,” DSM says. The companies expect the strongest uplift in sales to come from a new food and beverage unit that will combine DSM’s food and beverage ingredient business with Firmenich’s taste business.

Industry analysts consider the merger to be a positive move. “The new group will be of high quality and combine activities from fine fragrances through to flavors and supplement ingredients. It could be a true one-stop shop for many fast-moving consumer goods companies,” says Sebastian Bray, a chemical analyst at Berenberg Bank.

The flavors and fragrances sector is already highly consolidated, and together the top five players own more than 75% of the market, analysts at the investment firm Jefferies Group write in a note to clients. The DSM-Firmenich deal follows the similar 2021 acquisition of DuPont’s nutrition and bioscience business by International Flavors & Fragrances for $26.2 billion.

For Lanxess, teaming up with Advent to buy the DSM polymer unit is a prelude to fully exiting the engineering plastics business to focus on specialty chemicals.

In November, Lanxess said it would carve its own business into a separate legal entity, a maneuver that often presages a divestiture or spin-off. Around that the time, a raft of chemical companies, including DSM and DuPont, had put their engineering polymer units up for sale to focus on higher-growth core businesses.

In February, DuPont agreed to sell its engineering polymer business to Celanese for $11 billion. Then in April, DSM inked a deal to sell its Dyneema ultra-high-molecular-weight polyethylene business to the plastics compounder Avient for $1.5 billion.

As part of this latest deal, Lanxess’s high-performance polymer business will be combined with the DSM polymer unit into a new joint venture. Lanxess will own up to 40% of the venture, which it will keep for a minimum of three years, and Advent will hold the rest. Lanxess will also receive a payment of at least $1.2 billion.

The Lanxess and DSM polymer units both have annual sales of about $1.5 billion. The Lanxess business is a large producer of nylon 6 and its raw material caprolactam. It is also a major supplier of polybutylene terephthalate and thermoplastic composites. DSM likewise makes basic nylons such as 6 and 6,6. It also has a strong business in high-end nylons like 4,6 and 4,10, and it produces the engineering polymer polyphenylene sulfide.

Advent is a frequent investor in chemicals. Some of the more recognizable companies in its portfolio over the years have included the oxo chemical producer Oxea, the acrylic resin maker Rohm, and the coating resin producer Allnex.

Ronald Ayles, an Advent managing partner, says he had been pondering the merger of the Lanxess and DSM businesses for two years. “There’s a very strong logic,” he says. For example, DSM’s business is more specialized, while Lanxess brings back-integration into caprolactam production. DSM has a strong presence in Asia, creating an opportunity for the Lanxess business to penetrate that market.

“We’ve done a lot of transformational deals where we sort of build businesses by putting various non-core assets of the majors together, and forming a standalone unit,” Ayles says. “In the polymer chain, there’s a lot of consolidation, so there’s three or four large players forming. We saw an opportunity to build a global champion.”

For its part, Lanxess says the joint venture will make its remaining operations less cyclical and less exposed to the auto industry. It will focus instead on businesses such as pharmaceutical intermediates, lubricant and polymer additives, and inorganic pigments.



This article has been sent to the following recipient:

Chemistry matters. Join us to get the news you need.