DSM’s Greenback formalises €829m Martek tender

Greenback Acquisition Corporation, a wholly-owned Royal DSM subsidiary, has begun the formal tender for Martek Biosciences, which DSM announced it was buying for €829m ($1.087bn) last month.

Greenback is offering $31.50 (about €24) until February 18, 2011, although an extension is possible if all shares have not been procured at that point.

The Martek board of directors has unanimously determined that, among other things, the offer is fair to and in the best interests of Martek's stockholders and unanimously recommends that Martek's stockholders accept the offer and tender their shares,” DSM said in a statement.

The $31.50 offer amounted to a 35 per cent premium for NASDAQ-listed Martek shareholders over the share price of $23.36 on December 21, 2010, when the offer was announced.

That figure represented a multiple of 8.5 EBITDA for the DHA (docosahexaenoic acid) infant formula specialist, a standard for such acquisitions, although DuPont’s €4.9bn acquisition of Danisco this week came in at 12.8 EBITDA.

Yesterday 157,300 Martek shares exchanged hands between the price of $31.39 and the $31.45 closing price.

DSM’s acquisition of Martek, which turns over €450m annually, was its biggest acquisition since it paid €2.5bn for the vitamins business of Roche in 2002.

Third party credit rating agencies said DSM had an investment fund of between €2.5-€3bn before the Martek offer, with the company stating it continued to eye acquisition targets.

Analysts said DSM had been in the running to buy Danisco before the Danish company’s board accepted DuPont’s offer at the beginning of this week.

Buy or be bought

There had also been persistent rumours that DSM was itself an acquisition target, and its acquisition of Martek was partly spurred by its recognition of that reality.

Market analysts told NutraIngredients that the Martek acquisition and divestments in the chemicals area reflected a strategic decision by DSM to enhance its animal and human nutrition focus amid such rumours.

DSM board member Stephan Tanda said Martek’s ‘life’sDHA’ omega-3 brand would be retained, if not the Martek name itself.

Of the acquisition, Feike Sijbesma, chief executive officer/chairman of the DSM Managing Board said: “This acquisition is an attractive and logical next step for DSM. Martek’s leading position in healthy, natural ingredients and algal technology will add a new growth platform to our Nutrition business. DSM is a unique partner for Martek and, with our strong track record of growing businesses in competitive environments, we believe we can help to lift Martek to the next level.”