Novozymes’ microorganisms business (Novozymes Biologicals) has made a strategic decision to simplify its business and focus on its core technologies. The turf and landscape segment simply does not fit with this strategy. Most of this business is related to the formulation and sale of finished products for the turf and landscape markets, whereas Novozymes Biologicals wants to focus on microbial development for its core businesses, that is, Bioagriculture, Institutional & Household Cleaning, and Industrial Wastewater Treatment.
“Through our investment in the turf and landscape business we've been able to enter the larger bioagriculture business, which is growing. The reason why we're divesting the turf and landscape business now is that we want to ensure the continued growth and profitability of our bioagriculture business – as well as of our other core businesses – based on the development of our core technologies. Another important reason is that we want to secure the best future for our turf and landscape business, including our valued employees,” explains Thomas Videbæk, Executive Vice President of Novozymes' BioBusiness.
Expanding into bioagriculture
Novozymes’ turf and landscape business was established through acquisitions. As the business grew, Novozymes expanded its new technology into the larger bioagriculture market, an area where Novozymes can better utilize its core technologies. “We're constantly on the lookout for new and significant business, and must likewise secure focus on segments where Novozymes’ core technologies make the greatest impact,” says Thomas Videbæk.
Regrettably, the integration of the turf and landscape business into Lebanon Seaboard’s existing organization will leave a few positions redundant. “We deeply regret this situation and we have worked hard to find the best possible solution for the employees affected. In line with Novozymes’ business ethics we're offering individual severance packages and outplacement support,” says Ted Melnik, President of Novozymes Biologicals.
Novozymes’ turf and landscape business will be formally transferred to Lebanon Seaboard by 30 July 2009. With a view to creating a mutually beneficial strategic relationship, Novozymes will supply Lebanon Seaboard with microbes and, potentially, new technologies from Novozymes’ research and development group. Terms of the agreement between the companies are not disclosed.
Financial impactThe divestment affects Novozymes’ sales and earnings by an insignificantly negative amount and as such the transaction does not affect full year 2009 outlook. Sales to the turf and landscape markets are seasonal and mainly take place in the first half of the year (annual sales for the divested activities amount to roughly DKK 60 million, of which only a third occur in the second half of the year).