Change in the scope of the consolidation

Acquisitions


On 3 January 2017, DSM acquired 100% of the shares of Sunshine (Suzhou Sunshine New Materials Technology Co., Ltd.)— the manufacturer of a novel, high-performance solar photovoltaic (PV) backsheet based on co-extrusion technology.

Through this acquisition, DSM has expanded its product portfolio for the solar PV market to include polymer backsheets that protect PV solar cells. The total consideration amounts to €38 million, consisting of a cash payment of €17 million at closing of the deal, and an estimate of future variable earn-out payments of €21 million (discounted; the undiscounted amount is €28 million). The share purchase agreement stipulates four earn-out payments dependent on Sunshine's financial performance during March 2016 to February 2020. In accordance with IFRS 3, the purchase price of Sunshine has been allocated to identifiable assets and liabilities acquired. The resulting goodwill amounted to €17 million. The key components within the goodwill are future technology, future customer relationships as well as assembled workforce. The Purchase Price Allocation (PPA) of Sunshine was finalized in the course of the year. The acquisition of Sunshine contributed €5 million to net sales and -€1 million to EBITDA in 2017.

On 29 September 2017, DSM Hydrocolloids acquired a controlling interest of 59.5% in Inner Mongolia Rainbow Biotechnology Co., Ltd. by purchasing 59.5% of the shares. This company is a high-tech enterprise focusing on the research and production of application innovations of microbial polysaccharides and other biological gums. Via an additional capital payment in November 2017, DSM now owns 65%, with a non-controlling interest held by our partner, the founder of the company.
The total consideration amounts to €11 million, paid in cash at closing of the deal. In accordance with IFRS 3, the purchase price has been allocated to identifiable assets and liabilities acquired. The resulting provisional goodwill amounted to €14 million. The PPA is ongoing. The acquisition contributed €1 million to net sales and €0 million to EBITDA in 2017.

On 1 November 2017, DSM Nutritional Products acquired 100% of the shares of Twilmij B.V., a Dutch nutritional solutions company in the animal feed sector. The acquisition of Twilmij further strengthens DSM's foothold in the Northwest-European markets. The total consideration amounts to €65 million, consisting of a cash payment of €60 million at closing of the deal, and an estimate of future variable earn-out payments of €5 million. The earn-out value consists of four conditional payments, due on or before 28 February 2020, mainly dependent on growth of production, net sales and gross margin. In accordance with IFRS 3, the purchase price of Twilmij has been allocated to identifiable assets and liabilities acquired. The resulting provisional goodwill amounted to €43 million, representing the value for the innovation capability and assembled workforce. The PPA is ongoing and is expected to result in a re-allocation from goodwill to intangible assets relating to customer relations and brands. The acquisition of Twilmij contributed €14 million to net sales and €2 million to EBITDA in 2017.

On 21 December 2017, DSM Nutritional Products acquired 100% of the shares of BioCare Copenhagen A/S (Denmark) for a cash consideration of €44 million. With the acquisition, DSM expands its offering in gut health ingredients with probiotics. BioCare Copenhagen is a privately-held company founded in 2012, focused on probiotics and specialized in microbial actives. BioCare Copenhagen has multi-market distribution agreements with a number of leading dietary supplements and pharmaceutical companies. In accordance with IFRS 3, the purchase price of BioCare Copenhagen has been allocated to identifiable assets and liabilities acquired. The resulting provisional goodwill amounted to €43 million. The PPA is ongoing. The acquisition of BioCare Copenhagen did not contribute to net sales and EBITDA in 2017.

On 28 December 2017, DSM Nutritional Products acquired 100% of the shares of Amyris Brasil Ltda and established a long-term manufacturing partnership for Amyris' high-volume products. The consideration for Amyris Brasil Ltda (which owns and operates a production facility in Brazil) and intellectual property related to farnesene (a bio-based key intermediate for many applications) is €89 million including an additional value share arrangement over a three-year period. DSM paid € 74 million in cash at closing, and recognized a net liability of €15 million. In accordance with IFRS 3, the purchase price of Amyris Brasil has been allocated to identifiable assets and liabilities acquired. The resulting provisional goodwill amounted to €41 million. The PPA is ongoing. The acquisition of Amyris Brasil did not contribute to net sales and EBITDA in 2017.

The impact of the acquisitions on DSM's consolidated balance sheet at the date of acquisition is shown in the following table.

Acquisitions 2017

 
Amyris Brazil
 
Twilmij
 
Other
 
Total
 
Book value
Fair
value
 
Book value
Fair value
 
Book value
Fair
value
 
Book value
Fair
value
Assets
           
Intangible assets
23
23
 
-
-
 
13
36
 
36
59
Property, plant and equipment
26
26
 
16
16
 
21
21
 
63
63
Other non-current assets
18
18
 
-
-
 
6
6
 
24
24
Inventories
3
3
 
6
6
 
6
6
 
15
15
Receivables
12
12
 
8
8
 
5
5
 
25
25
Cash and cash equivalents
1
1
 
(1)
(1)
 
2
2
 
2
2
            
Total assets
83
83
 
29
29
 
53
76
 
165
188
            
Non-controlling interests
-
-
 
-
-
 
1
1
 
1
1
            
Liabilities
           
Non-current liabilities
18
18
 
-
-
 
4
10
 
22
28
Current liabilities
17
17
 
7
7
 
31
31
 
55
55
            
Total non-controlling interests and liabilities
35
35
-
7
7
-
36
42
 
78
84
            
Net assets
48
48
 
22
22
 
17
34
 
87
104
            
Acquisition price (in cash)
 
74
  
60
  
88
  
222
Fair value of associate contributed
 
-
  
-
  
1
  
1
Acquisition price (payable earn-out)
 
15
  
5
  
21
  
41
            
Consideration
 
89
  
65
  
110
  
264
            
Elimination book value associate
 
-
  
-
  
(1)
  
(1)
            
Goodwill
 
41
  
43
  
75
  
159
Acquisition costs recognized in APM adjustments
 
1
  
-
  
2
  
3

Disposals


There were no material disposals in 2017.

Other changes


In 2017, DSM and Evonik established a joint operation for omega-3 fatty acid products from natural marine algae for animal nutrition.

DSM Nutritional Products and Evonik Nutrition & Care each hold a 50% share in the joint operation and will co-own the production facility, which is to be built at an existing site of Evonik in the US and is expected to come on stream in 2019. The joint operation plans to invest around USD 200 million in the facility (USD 100 million by each party over circa 2 years). The joint operation is named Veramaris and is headquartered in the Netherlands. DSM accounts for the assets, liabilities, revenues and expenses relating to Veramaris in accordance with IFRS 11 for joint operations.