Haarmann & Reimer purchase leads to merger with rival
private equity group EQT. The company is to be merged with rival
firm Dragoco, creating a new company with a sales potential of
€1,245 million.
EQT Northern Europe Private Equity Funds (EQT) is to acquire the world's fifth largest flavours and fragrances maker, Haarmann & Reimer, from current owner Bayer.
At the same time, EQT will acquire shares in the competitor Dragoco, leading to a merger between the two rivals. The two Germany-based manufacturers will form a new company, operating under a new name.
EQT said it will have a controlling stake of 76 per cent in the new company. In addition, Dragoco CEO Horst-Otto Gerberding will hold a 22 per cent stake and the NordLB bank a 2 per cent stake. The merger is subject to approval by the cartel authorities.
The merger will create a company thought to be capable of sales of €1,245 million, allowing it to join the ranks of the top industry players.
Dragoco's Gerberding will head the new company while Haarmann & Reimer's president and CEO Lambert Courth will return to Bayer after the conclusion of the transaction.
The merged company will have 5,800 employees at some 30 production facilities around the world. The headquarters will remain in Holzminden, Germany.
Both Haarmann & Reimer and Dragoco have established strong global positions in fragrance and flavour manufacturing, and also aroma chemicals and cosmetic ingredients. Last year Haarmann & Reimer reported sales of €872 million, while Dragoco's 2001 sales generated €372 million.The new company will have a market share of around 11 per cent of the €11 billion global market.
EQT said that the merged company will seek to considerably expand its global position, noting that the broadened product portfolio and strengthened R&D resources were among the most important growth factors. EQT is to 'act as a catalyst' in this process to support the growth strategies of two competitors.
Gerberding said: "The merger will bring together complementary structures and resources in a new company that will combine Haarmann & Reimer's high technological standards and proven strengths in the field of R&D with the creativity and innovativeness of Dragoco. As a result, the new company will be in a better position with large customers in the food, perfume and cosmetic sectors."
Udo Philipp, partner at EQT Partners, the investment adviser to the EQT Funds, added: "EQT is proud to be the catalyst in the merger of these two successful companies. Both Haarmann & Reimer and Dragoco have had growth rates above industry average over the past years and EQT looks forward to support a continuous growth path for the new company."
Responding to news of the planned merger, Swiss flavours and fragrances company Givaudan said it would not change its goal to become industry leader and was still on the lookout for acquisitions.
"It looks like an interesting and very elaborate construction we see here. We shall see how this new company will position itself in the marketplace, but a priori I don't see that it really changes the competitive landscape," Givaudan chief executive Juerg Witmer said in an interview with Reuters.
He added that the new company's sales would still be well short of Givaudan's SFr2.8 billion. Givaudan so far remains the clear number two behind International Flavors and Fragrances
