Novozymes completes acquisition of EMD/Merck Crop BioScience Inc.

With effect from February 7, 2011, Novozymes A/S has completed its acquisition of EMD/Merck Crop BioScience Inc. from Merck KGaA.

In reference to company announcement no. 20 of December 20, 2010, the acquisition was subject to government approval and as the waiting period expired, the acquisition could be completed.
The transaction comprises the acquisition of EMD/Merck Crop BioScience USA, EMD/Merck Crop BioScience Canada, and EMD/Merck Crop BioScience Argentina, including the transfer of related tangible and intangible assets and liabilities as well as employees. The activities will be integrated into Novozymes’ existing BioBusiness division (Microorganism segment) and included in Novozymes’ consolidated financial statements.
EMD/Merck Crop BioScience had sales of roughly USD 60 million in 2010, and has been growing by roughly 15% annually during the last seven years, with strong profit margins supportive of Novozymes’ long-term EBIT margin target of more than 20%. The total amount paid to Merck KGaA is approximately USD 283 million (approximately DKK 1,550 million), and Novozymes has financed the transaction with existing financial resources.

Financial impact on Novozymes

Following the acquisition, Novozymes adjusts its guidance for 2011 communicated on January 21, 2011. Novozymes’ microorganism sales for 2011 are expected to be positively affected by approximately DKK 300 million, of which roughly two thirds are related to the first and second quarters of the year. As an effect of IFRS inventory accounting and integration costs, EBIT contribution is expected at zero, meaning that Novozymes’ overall guidance for EBIT growth and net profit growth for 2011 will not be changed. Novozymes’ overall EBIT margin is still expected to be within the 21–22% range, whereas ROIC is now expected at around 20% due to the higher amount of invested capital. From 2012 and onwards, the acquisition is expected to contribute to Novozymes’ long-term sales growth target of more than 10% annual organic growth, and an EBIT margin higher than 20%.
Read full stock exchange announcement here