In the Netherlands, Royal DSM has upped its stake in specialty food ingredient maker Yantai Andre Pectin Co. Ltd. from 29% to 75% for €150 million ($171.5 million).
Andre Pectin, located in Yantai, China, is Asia’s largest producer of apple and citrus pectin, hydrocolloids providing texture solutions for food, beverages and personal care.
The total purchase price the holding represents an EV/EBITDA multiple of about 13x based on the 2019 expected EBITDA of the company, excluding synergies. Yantai Andre Pectin Co. Ltd’s reports annual sales of approximately €65 million, with an EBITDA margin above 25%.
The remaining 25% of shares in Andre Pectin continues to be held by the Shandong Andre Group Co., Ltd, which supplies raw materials and utilities. DSM says it will work with the Andre Group to “continuously improve the operational performance of the company, ensuring reliable supply through its global sales network of high-quality (natural) pectin, while ensuring compliance with DSM’s safety, health and sustainability standards in the company’s operations.”
The deal, which is expected to close in either the first or second quarter, adds to DSM’s strong hydrocolloid product portfolio through majority stakes in DSM Zhongken Biotechnology Co., Ltd. and DSM Rainbow (Inner Mongolia) Biotechnology Co. Ltd.