Degussa Lead Candidate in Haarmann & Reimer Bid

22 April 2002 00:00  [Source: ICB Americas]

Degussa has become one of the leading candidates to purchase Haarmann & Reimer, Bayer's flavors and fragrances subsidiary, after Bayer revealed last week that Degussa is among a number of bidders for the business.

Manfred Schneider, Bayer's outgoing chairman, said earlier in the week that Degussa was not among the bidders. But, Bayer later confirmed that Degussa had made a nonbinding offer, claiming that Mr. Schneider's remarks were based on a list that was incomplete at the time.

Degussa sees a takeover of Haarmann & Reimer, with annual sales of around á850 million ($750 million), as an opportunity to become a leader in the global flavors market. Last year, Degussa's flavors and fruit systems business had sales of around á240 million.

Degussa also faces a dilemma of whether to acquire full control of Med-Avox, its former 50-50 joint venture with Ausimont in persalts. Solvay, its main competitor in persalts, became Degussa's partner in the venture after its recent acquisition of Ausimont but has been ordered by the European Commission to divest its shareholding for antitrust reasons.

Solvay has given Degussa first option to buy the stake. It also wants the buyer of the shareholding to acquire an Ausimont hydrogen peroxide plant which supplies feedstock to MedAvox at Bussi, Italy, and whose divestment has also been demanded by the Commission.

Degussa may not need the additional output gained by 100 percent control of MedAvox, which is due to bring on stream a 50,000-metric-ton-per-year sodium percarbonate unit at Bussi next year. Degussa is already building a 50,000-ton-per-year sodium percarbonate plant at Rheinfelden, Germany.

FMC Foret, FMC Corp.'s Spanish subsidiary, which is more than tripling its own sodium percarbonate capacity to 50,000 tons per year, and Kemira, the two other main players in the European persalts market, are possible bidders for the MedAvox stake.

"We do not have much of a presence in Southern Europe in persalts, but it is too early to say whether we would be interested in the MedAvox shareholding," says a Kemira executive.

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