DSM has reached an agreement to acquire the Biomin and Romer Labs businesses from Erber Group (Getzersdorf, Austria), an animal nutrition and health company, for an enterprise value of €980 million ($1.1 billion). Erber Group’s Sanphar and EFB businesses, representing 7% of its total sales, are not included in this transaction and will “be carved out before closing,” DSM says. The deal is subject to customary conditions and expected to close in the fourth quarter of 2020.
The value of the transaction represents an EV/EBITDA multiple of about 14 times 2020 EBITDA, the company says. The acquisition will be debt financed, with committed bridge financing in place. DSM says it continues to benefit from a strong balance sheet and remains committed to maintaining a strong investment-grade credit profile.
The acquired businesses, Biomin and Romer Labs, specialize primarily in mycotoxin risk management, gut health performance management, and food and feed safety diagnostic solutions. They have combined annual sales of €330 million and an adjusted EBITDA margin above 20% for the 12 months ended March 2020, with a high single-digit organic sales growth rate over the past five years, DSM says.
DSM expects the acquisition to provide revenue-enhancing synergies. The earnings per share contribution of the acquisition in 2021 is expected to be €0.15, DSM says. “Biomin and Romer Labs will help strengthen and accelerate the growth of our specialty animal nutrition and health offering, including our big data and diagnostic capabilities, and it is exciting to be entrusted to take these family-founded businesses forward,” say Geraldine Matchett and Dimitri de Vreeze, co-CEOs at DSM.
Erich Erber, founder and president of Erber Group, says that under DSM, “Biomin and Romer Labs will be able to use their new scale to intensify our joint contribution to a more sustainable world’s food supply.”
DSM says that Biomin’s technology provides protection against mycotoxins that occur as a result of natural fungus contaminants in animal feed and threaten the health of animals and humans. It is also a producer of phytogenic and probiotic feed alternatives to antibiotics. Romer Labs offers diagnostic technology with testing solutions for the analysis of mycotoxins in feed and food, food allergens and pathogens, as well as veterinary drug residues, with accredited full-service labs in Austria, the UK, the US, and Singapore, DSM says.