Netherlands-based ingredients major CSM has put its bakery ingredients division up for sale, to concentrate on its bio-based ingredients activities.
The company has plans to use the income earned by divesting the European and US bakery supplies business, which has sales of €2.4bn, to tap the growth opportunities available to the bio-based ingredients business; to decrease the debt; and to distribute funds to shareholders.
CSM said that it did not have the sufficient financial resources to keep bakery and bio-based ingredients businesses.
The Dutch company, therefore, believes that the divestment process for its North American and European Bakery ingredients businesses, will provide capital for activities that deliver higher growth.
With the fresh move, the company intends to transform into a bio-based ingredients company focusing on the Purac and Caravan Ingredients businesses.
Purac produces lactic acid being used in salad dressings, beverages and household detergents, while Caravan Ingredients makes various bakery ingredients including icings and fillings, emulsifiers, and bakery flavours and colourings.
Purac and Caravan posted combined sales of €704m last year, with their combined earnings before interest, tax, depreciation and amortisation (EBITDA) - and before central costs and one-off costs at €123.5m.
CSM CEO Gerard Hoetmer said the company intends to be a focused, bio-based ingredients company, with strong financial performance and exciting growth prospects that should generate attractive total returns for shareholders.
"While Bakery Supplies is a well-run business with excellent market positions, its value and prospects would be enhanced under different ownership," Hoetmer added.
CSM forecasts remarkable progress with the intended divestments by next year; however, it did not disclose whether it was in talks with potential buyers.
The company is a major supplier of bakery products and a provider natural food preservation and green chemicals.