DSM, the Dutch chemicals group, on Wednesday, said it was selling its bakery ingredients business for ?197.5m ($254m) cash to Gilde Investment Management, the private equity group.

The DSM unit is the world?s third-largest maker of yeast and the businesses which are to be sold had sales last year of about ?350m.

The move followed a strategic review of the business last year, which concluded divestment would be the best option.

DSM said it had sharpened its focus on food ingredients that provide health or nutritional functions.

?These trends limit the synergies between DSM bakery ingredients and the core of DSM?s food and nutrition businesses, ? it said. ?At the same time, the business characteristics of the markets in which DSM bakery ingredients operates are changing in terms of market growth potential and competitive intensity.?

DSM will keep its baking enzymes arm and retain a stake in Rymco, a joint venture in South Africa.

The sale is expected to be completed in the third quarter of this year.

JP Morgan acted as advisor to DSM, Lehman Brothers advised Gilde.

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