DSM is looking for a buyer for its anti-infectives business.
Dutch company DSM is looking to streamline its portfolio, and one of the businesses it wants to sell is DSM Sinochem Pharmaceuticals (DSP). The joint venture with Sinochem, which produces anti-infectives, could fetch a sale price of up to $785 million.
Sinochem has a right of first refusal, but has indicated that it wants out of DSP too. DSM has turned to Rothschild for support with the divestiture. It is expected that private equity firms such as CVC, BC Partners, Bain, Charterhouse and SK Capital will be interested in the anti-infectives business.
Earnings for DSP in 2018 earnings before interest, tax, depreciation and amortization are predicted to be approximately €80 million. In 2017 its core profit was €73 million. The business is expected to be valued at eight times earnings at a minimum.
DSP isn’t the only JV DSM is putting on the block. One other example is a business co-owned with U.S. biofuels maker POET. The strategy behind these moves is a shift away from cyclical, commoditized businesses to more specialty operations, such as vitamins, enzymes, fabrics and plastics used in cars, garments and construction chemicals. DSM has been putting the former into JVs with the intention of eventually exiting these businesses.