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DSM buys Canadian food supplements company

by Renee Cordes | Published May 18, 2012 at 8:36 AM

Acquisitive Dutch life sciences and material sciences company Royal DSM NV on Friday, May 18, struck its second North American deal in less than a month with an agreement to buy private equity-backed Ocean Nutrition Canada for C$540 million ($528.5 million) in cash.

The Heerlen, Netherlands-based company is purchasing the maker of fish-oil derived Omega-3 fatty acids from Canadian financier John Risley's Clearwater Seafoods Inc. and Winnipeg, Manitoba-based Richardson Capital Ltd.

The agreement comes a little more than two weeks after DSM agreed to buy Nasdaq-listed biomedical company Kensey Nash Corp. for $360 million in cash. Last year the company acquired Columbia, Md.-based health-food ingredients company Martek Biosciences Corp. for $973 million.

In a conference call, DSM CEO Feike Sijbesma said the purchase of Ocean Nutrition Canada was the next logical step in developing its nutritional lipids business.

"Our science-based knowledge and expertise in nutritional ingredients will help to further grow Ocean Canada's business as part of DSM," he said.

CFO Rolf-Dieter Schwalb added that the company still has about €2 billion ($2.5 billion) in cash for acquisitions.

Ocean Nutrition is majority-owned by John Risley, who founded Ocean Nutrition as well as Clearwater Seafoods. In the early 1990s he began to research the possible health benefits of shark cartilage, but quickly turned to fish oil instead after seeing scientific evidence supporting its benefits for the heart and brain. He founded Ocean Nutrition as a four-person operation in 1997.

Today Ocean Nutrition, based outside Halifax, N.S., makes fish-oil derived supplements as well as ingredients for other food groups. It is expected to have net 2012 sales of about C$190 million with Ebitda of C$55 million to C$60 million. The company has production sites in Canada, the U.S. and Peru, and has 415 employees. Over the past five years, it has grown at an average 20% measured in local currency terms.

In North America, Ocean Nutrition supplements are sold at Wal-Mart Stores Inc.'s Wal-Mart and Sam's Club outlets, as well as General Nutrition Centers Inc.'s GNC stores.

DSM expects the transaction to contribute to earnings per share as of 2013.

A DSM spokesman declined to comment on a lawsuit reportedly filed by a Kensey Nash investor in Delaware Chancery Court claiming that DSM's $38.50-perishare price short changes investors.

The lawsuit, filed by investor Hilary Coyne, asks a judge to freeze the proposed sale and certify the lawsuit as a class action lawsuit, on behalf of all shareholders, according to Bloomberg News.

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Tags: Acquisitive Dutch life | Ocean Nutrition Canada | PE | Royal DSM NV

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