Royal DSM, a global science-based company in Nutrition, Health and Sustainable Living, to acquire First Choice Ingredients, a leading supplier of dairy-based savoury flavourings for an enterprise value of $453 million. This transaction represents an EV/EBITDA multiple of 19.8 based on the estimated 2021 adjusted EBITDA. The estimated 2021 sales amount to about $75 million.

With headquarters in Germantown and three manufacturing facilities in the vicinity, the company and its approximately 100 employees have built a leading position in US taste market as a developer of clean label, fermented dairy and dairy-based savoury flavourings for taste and functional solutions across a wide range of applications.

The company ferments and blends a variety of natural dairy products with cultures and enzymes to create clean label taste solutions integrating sensory and functional benefits. Leveraging its research and development and application expertise, First Choice Ingredients works as an innovation partner with food producers, flavour houses and food service suppliers in applications such as soups, snacks, salad dressings and sauces, prepared meals, sweet baking, as well as dairy products and plant-based meat and dairy alternatives.

DSM is a leading global solutions provider to the food and beverage industry, with unique capabilities in nutritional ingredients (such as nutritional lipids, vitamins and nutrient premixes) and a global product portfolio of specialty ingredients (such as cultures, enzymes, yeast extracts, process flavours, and texturizing hydrocolloids).

The company’s deep expertise in application and formulation, nutritional science, as well as fermentation and biotechnology know-how, enable customers to improve taste and texture, and optimize nutritional profiles and health appeal, while boosting process efficiencies and reducing loss and waste.

This acquisition will be highly synergetic for both companies. The company can further accelerate growth by offering their products outside the US to its broad global customer base and integrating their solutions in full offering for customers. The acquisition gives the company access to world-leading biotechnology toolbox, fermentation know-how, and global customer relationships.

Geraldine Matchett and Dimitri de Vreeze, co-CEOs of Royal DSM, said, “We look forward to welcoming the First Choice Ingredients people to DSM. Our companies are a great fit, with a shared passion for science-based solutions for delicious, nutritious, and sustainable food and beverage products. This acquisition is an attractive next step for DSM as we continue to build our health, nutrition, and biosciences capabilities.”

Patrick Niels, president of DSM Food Specialties, said, “We are very pleased with the addition of First Choice Ingredients and its skilled workforce to our business. It will enable us to extend our integrated solutions offering in food and beverage, and provide our customers with innovative taste solutions for the new and improved end-products today’s discerning consumers continually demand.”

Jim Pekar, president, First Choice Ingredients, said, “This is the right time in First Choice Ingredients’ journey to become part of a company such as DSM. The people of First Choice Ingredients will continue to deliver our legendary products and customer service with can-do attitude and relentless focus on product integrity and innovation. They are some of the most hard-working and loyal teammates ever assembled under one roof.” Roger Mullins, Executive VP of First Choice Ingredients, continued: “We are excited to join DSM. This will enable us to accelerate our growth by adding our taste solutions to DSM’s broad portfolio of global products and integrated offerings to meet the needs of our customers and create new opportunities. This combination will allow access to DSM’S powerful toolbox of fermentation technology.”