Dutch-headquartered company Royal DSM has signed an agreement to acquire First Choice Ingredients, a supplier of dairy-based concentrates and savory flavorings for an enterprise value of $453m.
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Closeup of a texture of a spreadable butter Pic: Getty Images/stanzi11

The transaction represents an EV/EBITDA multiple of 19.8x based on the estimated 2021 adjusted EBITDA. The estimated 2021 sales amount to about $75m.

With headquarters in Germantown, Wisconsin, and three manufacturing facilities in the vicinity, First Choice Ingredients and its approximately 100 employees produce clean label, fermented dairy and dairybased savory flavorings for taste and functional solutions across a wide range of applications.

The company ferments and blends a variety of natural dairy products with cultures and enzymes to create clean-label taste solutions integrating sensory and functional benefits. First Choice Ingredients works as an innovation partner with food producers, flavor houses and food service suppliers in applications such as soups, snacks, salad dressings and sauces, prepared meals, sweet baking, as well as dairy products and plant-based meat and dairy alternatives.

DSM said the acquisition will be highly synergistic for both companies. DSM said it can further accelerate the growth of First Choice Ingredients by offering its products outside the US to DSM’s global customer base and integrating solutions into DSM’s full offering for F&B customers. The acquisition gives First Choice Ingredients access to DSM’s biotechnology, fermentation knowledge, and global customer relationships.

Geraldine Matchett and Dimitri de Vreeze, co-CEOs of Royal DSM, said, “We look forward to welcoming the First Choice Ingredients people to DSM. Our companies are a great fit, with a shared passion for science-based solutions for delicious, nutritious, and sustainable food and beverage products. This acquisition is an attractive next step for DSM as we continue to build our health, nutrition, and biosciences capabilities.”

Patrick Niels, president of DSM Food Specialties, said, “We are very pleased with the addition of First Choice Ingredients and its skilled workforce to our business. It will enable us to extend our integrated solutions offering in food and beverage, and provide our customers with innovative taste solutions for the new and improved endproducts today’s discerning consumers continually demand.”

Jim Pekar, president of First Choice Ingredients, said, “This is the right time in First Choice Ingredients’ journey to become part of a company such as DSM. The people of First Choice Ingredients will continue to deliver our legendary products and customer service with can-do attitude and relentless focus on product integrity and innovation. They are some of the most hard-working and loyal teammates ever assembled under one roof.”

Roger Mullins, executive VP of First Choice Ingredients, added, “We are excited to join DSM. This will enable us to accelerate our growth by adding our taste solutions to DSM’s broad portfolio of global products and integrated offerings to meet the needs of our customers and create new opportunities. This combination will allow access to DSM’s powerful toolbox of fermentation technology.”

Subject to regulatory approval, the transaction is expected to close in Q4 2021.

Last month, 14 of our dairy farms in Maine, as well as dozens of dairy farms across northern New England, got an unexpected and disappointing notice from Danone of North America saying that they were discontinuing their contracts with our organic dairy farmers in Maine, New Hampshire, Vermont and elsewhere.

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