DSM Acquisition of Roche Vitamins a Rumor

BASEL, Switzerland--The rumor mill was given a good push when the German newspaper Badische Zeitung reported in late May that Switzerland-based Roche Holding AG would sell its vitamins and fine chemicals division to the Netherlands-based group DSM N.V. However, sources at the U.S.-based Roche division told INSIDER this is only a rumor, and that the company is still exploring its options.

In February 2002, Roche A.G. announced it was reviewing strategic options outside of the company for its vitamins and fine chemicals division. It was the only Roche business to post a decrease in operating profit margin for fiscal 2001, falling 3.9 percent. In addition, the division was suffering from heavy fines paid in anti-trust suits that began in the early '90s. Most recently, the European Commission fined Roche Vitamins and Fine Chemicals 778 million Swiss francs (US$455 million) for taking part in an international vitamin price-fixing scheme, which included other companies such as BASF and Eisai Co. As a precautionary measure, Roche put aside an additional 760 million Swiss francs (US$444 million) for lawsuits still pending in the United States.

To date, Roche (www.roche-vitamins.com) reported it has three options: to spin off as a separate company, to be acquired by someone or to have the division's assets purchased by an investment bank. In February, Roche told INSIDER that if an outside corporation bought the division, it would likely be someone with similar interests and a comparable customer base, and possibly someone active in the fine chemicals area.

According to a U.S. Roche source, the division heard about the announcement when the news crossed the Atlantic and hit American newspapers. Outlets such as Reuters and Dow Jones Business News picked up the story, with Reuters quoting a DSM spokesperson as saying that although DSM wants to grow its life sciences and specialty chemicals channels via acquisitions, the company had nothing to report on that front at the moment.

DSM could well be a possible candidate to acquire this Roche division, the source told INSIDER; however, so are several other companies. According to Dow Jones, analysts covering DSM have reported that companies such as Germany-based Degussa AG and Denmark-based Christian Hansen Holding A/S are other companies DSM may possibly take over.