This article is provided to FT.com readers by mergermarket—a news service focused on providing actionable, origination intelligence to M&A professionals. www.mergermarket.com
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The sale by Royal DSM of its fertilizer business DM Agro has attracted the interest of UK specialist Yara, but the listed, Dutch chemical group has had to split its rubber business DSM Elastomers in two to entice buyers, sources told mergermarket.
DSM Elastomers is said to have been split, a source close to the Dutch group and a person claiming knowledge of the situation said. Lanxess may have been attracted to the high margin EPDM Keltan product range, the person claiming knowledge said. Lanxess declined to comment.
The source close to DSM indicated that Yara “would certainly be on a shortlist” of the big players in the fertilizer business to acquire DSM Agro but declined to elaborate.
A sector banker said that Yara needs acquisitions to reach the 10% global market share it has set as a target. Yara would make sense as it has a “big fertilizer footprint in Holland” and DSM has its production sites at Geleen and IJmuiden in the Netherlands, an analyst added.
Yara declined to comment.
The person claiming knowledge said that DSM Elastomers had to be split to make a sale possible but a question mark now hangs over its low-margin business, which is a rubber pre-product. An analyst said DSM Elastomers is unlikely to attract a listed, European chemicals buyer. ”Being a low margin commodity, its activities are too basic to be attractive for this type of buyer,” he said.
The sale of DSM Agro, DSM Elastomers and DSM Melamine, the company’s fertilizer, rubber and melamine businesses respectively, are ongoing, the source close to the company said. The three businesses had a combined turnover of EUR 285m in Q209. Goldman Sachs is understood to be advising on the divestitures.
The sales are likely to be completed before the “end of September 2010” deadline which is in line with the company’s vision 2010, a strategy document formulated in 2005, the source close said. “A completion of those deals would be in line with that target,” this source added.
This news service previously reported that K+S has also been tipped in the press as being interested in DSM Agro. K+S declined to comment.
DSM has a market cap of EUR 7.1bn.
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