• The acquisition of Germantown is an important milestone in Danisco´s growth strategy of becoming the world´s leading supplier of food ingredients.
  • Danisco, the number one supplier of texturants in Europe, will now be in a leading position in Australia/New Zealand, as well as the United States and the rest of the Americas.
  • Strong synergies in the areas of purchasing, infrastructure, and reduced costs will create economic value added after the second full financial year.

On Wednesday (15 August) Danisco purchased Germantown from the Australian-based firm Goodman Fielder. Germantown is a leading supplier of texturants in Australia and New Zealand and has a strong presence in North and South America and in Asia. Germantown employs 270 and has net sales of approx USD 70 million (approx DKK 575 million) in 2001.

Germantown develops, produces and sells functional systems, which are tailored blends of emulsifiers, stabilisers and other functional ingredients designed to solve customer problems predominantly in the food industry. Most of Germantown´s products are sold to the ice cream, dairy and bakery industries as well as to the condiment industry. The company is also active in the areas of spray-dried food powders such as coffee whiteners, whipping agents and blends for the pet-food industry.

Danisco's CEO Alf Duch-Pedersen says:
"Danisco is the leading supplier of texturants to the world food market. Germantown is a strong regional player that perfectly complements Danisco´s global presence. Germantown provides Danisco with the missing Australia/New Zealand platforms in the Asia Pacific arena, where Danisco is experiencing strong organic growth in ingredient sales."

"The purchase gives us many talented and capable new colleagues as well as an increased range of ingredient solutions that we can offer our customers. By integrating our texturants with Germantown, Danisco will enhance its range of products, customer base, and knowledge base. Being close to the customer is certainly beneficial to understanding local needs and providing quick technical service and fast product delivery," states Alf Duch-Pedersen.

Strong cumulative cost synergies have been identified in the range of USD 8-9 million (approx DKK 70 million). Synergies will be realised through combined purchasing power and use of Danisco-produced raw materials in Germantown formulations, more efficient use of our combined production capacity for both functional systems and emulsifiers, elimination of some future investment, and optimisation of the organisation.

The purchase price of Germantown is USD 100 million (approx DKK 825 million) where two thirds is goodwill. The price corresponds to approx 13 times EBITDA (USD 7.5 million or around DKK 60 million) and the EBITA is USD 5.6 million (approx DKK 45 million) based on the financial year 2001. The acquisition will fulfil Danisco's general financial target of having a return exceeding the cost of capital (WACC - Weighted Average Cost of Capital) at the latest in the third full financial year. The applied cost of capital is approx 9 per cent.

Facts

Danisco develops and produces food ingredients, sweeteners and sugar. The Group employs 15,000 people in 40 countries and in 2000/01 Danisco reported net sales of DKK 23.5 billion. Danisco´s broad product portfolio includes emulsifiers, stabilisers, flavours, and sweeteners such as xylitol and fructose. Many of these ingredients are produced from natural raw materials and contribute, for instance, to improving the texture of products such as bread, ice cream and yoghurt. Danisco is also one of the largest and most efficient sugar producers in Europe.

Germantown is a world-class producer of high quality stabiliser and emulsifier functional systems. The business is the leading provider of functional systems for the dairy industry in Australia. Germantown has operations in the US, Canada, Brazil, Mexico, Australia and New Zealand and have sales offices in Thailand and China. Germantown is owned by Goodman Fielder Limited. Germantown employs 270 people and has sales of approx USD 70 million in 2001.

Danisco, based in Copenhagen, Demark, develops and produces food ingredients, sweeteners and sugar. The Group employs 15,000 people in 40 countries and in 2000/01 Danisco reported net sales of $2.8 billion USD. Danisco's broad product portfolio includes emulsifiers, stabilizers, flavors, and sweeteners such as xylitol and fructose. Many of these ingredients are produced from natural raw materials and contribute, for instance, to improving the texture of products such as bread, ice cream and yogurt. Danisco is also one of the largest and most efficient sugar producers in Europe. Danisco Cultor, the ingredients division of Danisco, has its US headquarters in New Century, Kansas.


To view related research reports, please follow the links below:-

The 2000-2005 World Outlook for Sugar

Key Players in the Global Additives Industry

World Sweetener Players: A strategic assessment of future competitive conditions in refined sugar and starch sweetener markets