DSM: Erber Group acquisition further strengthens Nutrition franchise
With the announced acquisition of the Erber Group, shortly after the closing of the Glycom acquisition, DSM’s renewed management team shows its ambitions to further grow the company, mainly in the Nutrition space. We consider Erber Group to be a good strategic fit, both enlarging the product portfolio with another animal nutrition specialty ingredient (mycotoxin detoxifiers) as well as strengthening existing pockets (eubiotics and the premix footprint). We continue to appreciate DSM mainly for its broad product portfolio in Nutrition with solid leadership positions and perceived earnings defensiveness, but we consider valuation to be about fair. After adjusting our model for the Erber Group acquisition, we slightly raise our target price from € 115 to € 120 while maintaining our Hold rating.Royal DSM is engaged in the creation of products and services in Life Sciences and Materials Sciences. Co.'s products and services are used globally in range of markets and applications in healthcare, pharmaceutical automotive and chemicals sectors. End markets include human and animal nutrition and health, personal care, pharmaceuticals, automotive, coatings and paint, electrics and electronics, life protection and housing. The activities of Co. are grouped into four clusters: Nutrition, Pharma, Performance Materials and Polymer Intermediates.
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