Unitech purchase reinforces DSM’s transformation to a nutrition major

By RJ Whitehead

- Last updated on GMT

Related tags Nutrition

Unitech purchase reinforces DSM’s transformation to a nutrition major
Global chemical major Royal DSM has continued its long march into nutrition with the announcement of its acquisition of New Zelaand’s Unitech Industries.

The move is the latest step into the transformation of the company by chief executive Feike Sijbesma from a traditional chemicals company into a nutritional products-based one.

Although the value of sale is undisclosed at this time, DSM has now jettisoned its fertilizer, melamine and petrochemical units while so far spending at least US$3.1bn on its nutritional arm, according to analysts.

Unitech, which is based in Auckland, was founded in 1970 and focuses primarily on the manufacture and sale of micronutrient premixes and macronutrient blends for the rapidly growing Asian human nutrition and health markets. Employing around 100 staff, Unitech realises annual net sales of around NZD$50m.

Local leader

With a large customer network including multinational brand names and large regional clients, it is the leading producer of food ingredient premixes in Australasia and supplies dairy-containing products across Asia. Unitech also holds also a strong position in the third-party manufacture of macronutrient blends.

DSM will enhance this value proposition with its portfolio of micronutrients, science-based expertise and customer relationships with multinational and regional infant nutrition and food customers.

Rick Greubel, DSM’s president for human nutritional products said the acquisition would add to the company’s geographic footprint and presence in the value chain.

"The acquisition of Unitech helps us to expand our value chain presence, geographical reach and customer base. As a leader in food ingredient premixes and blends, Unitech will allow us to deliver more value to our multinational, Oceania and Asia based customers​," Greubel said in a statement.

Changing directions

DSM has been actively looking for ways to move away from its caprolactam business, in which it has been a world major over much of the last 60 years, using the organic compound for plastics, carpets and car parts.

Although it accounts for much of US$2.1bn in sales in its polymer intermediates business, revenue from caprolactam has been on a consistent decline on the back of higher benzene prices.

This is why the company has been eyeing a greater presence in the world’s growing nutrition market over the last decade to the point that DSM is considering an exit from caprolactam altogether, according to unnamed sources quoted by Bloomberg this week.

This realignment began in 2003 with the acquisition of Roche’s nutritional products and has continued with a number of more recent bioscience purchases. Last year alone, it purchased Ocean Nutrition Canada, Tortuga, an animal nutrition company, Cargill’s cultures and enzymes business and the Fortitech ingredients operation.

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