DSM to acquire Tortuga to strengthen animal nutrition business
- DSM (NYSE Euronext: DSM KON) to acquire Tortuga for total enterprise value of about €465 million in cash
- Tortuga expected 2012 net sales: about €385 million, with EBITDA of about €60 million
- Tortuga is the leader in nutritional supplements for ruminant/beef cattle market in Brazil
- Acquisition will strengthen DSM’s presence in the significant and highly attractive animal nutrition market in Latin America
- Tortuga offers excellent revenue synergies for DSM to supply existing vitamins and other products via Tortuga
- Acquisition extends DSM’s current nutritional ingredients range to include organic trace mineral additives with excellent fit into DSM’s animal nutrition portfolio for further global expansion
- Acquisition consistent with DSM’s strategic focus on High Growth Economies
- Value creating acquisition; immediately EPS accretive
Royal DSM, the global Life Sciences and Materials Sciences company, announced today that it has entered into a definitive agreement to acquire Tortuga Companhia Zootécnica Agrária (Tortuga) in an all cash transaction for a total enterprise value of about €465 million (BRL 1,160 million). Depending on the actual 2012 EBITDA result, an adjustment in the purchase price up to a maximum enterprise value of about €490 million can be made, based on the same EBITDA-multiple. Subject to customary conditions, the transaction is expected to close in Q1 2013.
Tortuga, a privately held Brazilian company, is a leading company in nutritional supplements with a focus on pasture raised beef and dairy cattle. The company is headquartered in Sao Paulo, Brazil with approximately 1,200 employees. Tortuga has three production sites in Brazil. Net sales for 2012 are expected at about €385 million (BRL 965 million) with an EBITDA of about €60 million (BRL 150 million). DSM has identified attractive revenue and other synergies.
Pasture raised beef and dairy cattle spend a significant part of their life feeding on natural vegetation, which means they often lack minerals, phosphorus, nitrogen sources, vitamins and micro nutrients in their diet. Therefore, nutritional supplements are required to enhance animal performance and health. The size of the global market for nutritional supplements for ruminants is estimated to be well in excess of € 4 billion, growing by around 3% per year with significantly stronger growth (7-10%) in organic trace minerals (chelates). Tortuga is one of the global leaders in organic trace minerals, despite the fact that it has so far been active only in Latin America.
The acquisition of Tortuga allows DSM to capture value from its extended value chain presence with a broad portfolio of nutritional ingredients for animal nutrition, while leveraging its strong international footprint. Specifically, value will be created through revenue synergies by introducing DSM ingredients into Tortuga’s products and mixes as well as into its distribution channels for ruminants, and bringing Tortuga’s unique products, especially the complete organic trace minerals portfolio of products, to DSM animal nutrition customers worldwide. The acquisition will also strengthen DSM’s ability to provide integrated nutritional solutions, capturing increased value from know-how and animal nutrition advisory services.
The acquisition of Tortuga will broaden DSM’s ingredient portfolio to include organic trace minerals and will allow DSM to become a full animal nutrition solution provider. Tortuga will strengthen DSM’s presence in nutritional supplements and additives for ruminants and is expected to accelerate revenue growth through leveraging Tortuga’s know-how and strong position in ruminant supplements in other ruminants markets in Latin America and around the world. DSM can also introduce Tortuga’s strong position in organic trace minerals to other market segments worldwide such as nutrition solutions for swine and poultry producers.
The transaction will also strengthen DSM’s presence in Brazil, the leading global beef producer and exporter with an attractive expected growth, and will give DSM additional sales channels in the Brazilian market. The acquisition is also consistent with DSM’s strategic focus on High Growth Economies, one of the four growth drivers of DSM’s strategy.
DSM expects the transaction to be immediately EPS accretive. Customary operational efficiencies will also be realized in the integration process.
The acquisition of Tortuga is the seventh acquisition in the Nutrition cluster since DSM announced its corporate strategy DSM in motion: driving focused growth in September 2010. These acquisitions form an integral part of DSM’s strategy for its Nutrition cluster and will contribute to the current and future growth of DSM’s attractive portfolio in health, nutrition and materials.
Feike Sijbesma, CEO and Chairman of the DSM Managing Board, said: “With the acquisition of Tortuga we have announced €2.2 billion worth of growth enhancing acquisitions, of which €1.8 billion in our Nutrition cluster, since we embarked on our current strategic plan less than two years ago. After completion of the announced acquisitions DSM’s Nutrition cluster will on a pro forma basis surpass €4 billion in net sales on an annual basis, resulting in stronger and more stable growth and profitability for DSM overall. This acquisition fully fits DSM’s strategy as we continue to create value for all stakeholders by providing innovative, sustainable solutions to the world’s greatest current and future challenges.”
Leendert Staal, President and CEO of DSM Nutritional Products, commented: “The acquisition of Tortuga is a very important milestone for DSM. It will strengthen our position in nutritional supplements and additives for ruminants and our presence in Brazil, one of the leading ruminant markets in the world. Tortuga also broadens our animal nutrition ingredients portfolio with the highly attractive organic trace minerals, while offering many value creating synergies. I look forward to welcoming the very capable team of Tortuga employees to DSM.”
Creuza Fabiani, President of Tortuga, commented: “Having been in business for almost 60 years, Tortuga still has huge potential for growth, as well as a great deal to offer the animal proteins production sector. DSM will take on this challenge, and will continue to build on what has already been achieved to date. I chose DSM after careful consideration since their operations in Brazil do not conflict with those of Tortuga, and also because of the great synergy between the two companies, which will provide the entire team at Tortuga with the opportunity to grow.”
Today DSM will hold a conference call for the media from 08.00 AM – 08.30 AM CET (+31 (0)10 29 44 228 or +44 (0) 203 365 3207) and a conference call for investors and analysts from 09.00 AM – 10.00 AM CET (+31 (0)10 29 44 271 or +44 (0) 203 365 3207). Also, more information can be found in the presentation that can be found on DSM’s corporate website.
Tortuga, pioneer in animal nutrition and health, is the largest producer of mineral supplements for production animals in Brazil and one of the largest in the world. In addition to Brazil the company sells its products in more than nine countries throughout Latin America, meeting the requirements of rural producers working with livestock (beef and dairy), swine, poultry, equine, goat and sheep. With more than 58 years of history, Tortuga has contributed decisively to the advancement of animal production in Brazil introducing in a pioneer way new concepts of vitamin and mineral supplements, including the technology for organic minerals in animal feed. Tortuga has over 1,200 employees and approximately 700 sales agents located throughout Brazil. Tortuga, headquartered in Sao Paulo, has three industrial sites in Brazil located in Mairinque (SP), São Vicente (SP) and Pecém (CE).
This press release may contain forward-looking statements with respect to DSM’s future (financial) performance and position. Such statements are based on current expectations, estimates and projections of DSM and information currently available to the company. DSM cautions readers that such statements involve certain risks and uncertainties that are difficult to predict and therefore it should be understood that many factors can cause actual performance and position to differ materially from these statements. DSM has no obligation to update the statements contained in this press release, unless required by law. The English language version of the press release is leading.