Balchem Corners American Choline Market

SLATE HILL, N.Y.--Balchem Corp. (AMEX:BCP), based here, announced May 22 that its wholly owned subsidiary, BCP Ingredients, is acquiring the choline portion of Highland, Ill.-based DCV Inc. and its affiliate, Wilmington, Del.-based DuCoa L.P. These assets include choline for animal feed and human consumption, as well as DuCoa's manufacturing facility in Verona, Mo. (DCV had produced choline for human consumption, while DuCoa had produced it for animal premixes.) According to DCV, the combined companies were one of the largest choline producers in the world, and DCV had been the only company in North America that had provided human-grade choline--a title that now belongs to Balchem.

The price for this acquisition is set for $14.98 million, which is subject to certain adjustments. In addition, there is a possibility for contingent payments up to a maximum of $3 million depending on gross margins achieved on certain product lines over a three-year period.

Choline, which is a nitrogen-containing alcohol sometimes called vitamin B4, helps aid brain development and nerve function. It is also required by the Food and Drug Administration (FDA) to be included in infant formulas.

Lucien Hernandez, vice president of DCV, is moving to Balchem to help with the human-grade side of the business. He stated that DCV's choline has been used in line extensions for such companies as One-A-Day and Centrum to enhance memory. However, this is only one of the benefits of this alcohol. "It has more important benefits, like aiding in liver health and lowering homocysteine," Hernandez elaborated.

Balchem was previously a marketer of choline, but now it would "integrate backwards" by also manufacturing the ingredient, Hernandez stated. "Choline for Balchem represents a major area of growth," he added. "They can do more with the choline than DCV could, due to Balchem's technologies."

Balchem reported sales of $33 million for 2000, $13 million of which included its human, animal and industrial encapsulated ingredient businesses. DCV/DuCoa is estimated to average $17 million in sales for their choline ingredients. Choline is one of many ingredients DuCoa and DCV had produced, and they still manufacture ingredients that include specialized proteins and complex minerals.

For more information, visit www.balchem.com, www.dcvinc.com or www.ducoa.com.