3 Change in the scope of the consolidation

Acquisitions

In 2021, DSM acquired businesses for a total consideration of €757 million (in 2020: €1,579 million).

Amyris F&F bio-based intermediates business

On 31 March 2021, DSM Nutritional Products acquired the flavor and fragrance (F&F) bio-based intermediates business of Amyris, Inc., which extends DSM’s offerings in aroma ingredients with bio-based ingredients for the flavor and fragrance and cosmetics industries, for an upfront consideration of €128 million. Amyris will share in the EBITDA growth over the period 2021–2024 of certain activities (mainly products just launched and under development), which is estimated to result in a total earn-out amount in the range of €85–€128 million.

In accordance with IFRS 3 (Business Combinations), the purchase price was allocated to identifiable assets and liabilities acquired, resulting in a tax-deductible goodwill amount of €29 million and technology intangible assets of €167 million.

The acquisition of the F&F bio-based business contributed €14 million to net sales, €3 million to operating profit and €5 million to Adjusted EBITDA during a period of nine months in 2021. If the acquisition had occurred on 1 January 2021, additional net sales would have been approximately €19 million, operating profit €4 million and Adjusted EBITDA €7 million.

Midori USA

On 26 July 2021, DSM Nutritional Products acquired the remaining 63.5% stake in Midori USA, Inc., a biotechnology start-up with a novel precision platform developing breakthrough targeted eubiotics that improve the health and reduce the environmental impact of animals, in a step acquisition for a cash consideration of €52 million. Contributing the fair value of the previously held equity interest to this transaction of €22 million brings the total consideration to €74 million.

In accordance with IFRS 3, the purchase price was allocated to identifiable assets and liabilities acquired, resulting in a non-tax-deductible goodwill amount of €55 million and technology intangible assets of €30 million.

The acquisition of Midori did not contribute to net sales; operating profit amounted to €1 million and Adjusted EBITDA €1 million during a period of five months in 2021. If the acquisition had occurred on 1 January 2021, operating profit would have been €3 million and Adjusted EBITDA €2 million.

First Choice Ingredients

On 18 October 2021, DSM Food Specialties acquired 100% of the shares of First Choice Ingredients, Inc. in Germantown (Wisconsin, USA), a company developing, producing and marketing clean label dairy-based flavor solutions obtained through fermentative processes, for a cash consideration of €394 million.

In accordance with IFRS 3, the purchase price was provisionally allocated to identifiable assets and liabilities acquired and is based on a draft initial purchase price allocation prepared by an independent valuator. Completion of the independent valuation process is expected in 2022. Main intangibles provisionally recognized are customer relationships for about €100 million and technology for €83 million. The acquisition is expected to result in tax-deductible goodwill to the amount of €190 million.

The acquisition of First Choice Ingredients contributed €13 million to net sales, €1 million to operating profit and €4 million to Adjusted EBITDA during a period of three months in 2021. If the acquisition had occurred on 1 January 2021, additional net sales would have been €64 million, operating profit €7 million and Adjusted EBITDA €19 million.

Vestkorn Milling

On 16 December 2021, DSM Food Specialties acquired a 100% interest in Vestkorn Milling, headquartered in Tau, Norway. Vestkorn Milling is a producer and supplier of plant-based proteins, fibers, starches and cereals used in food and pet food products. The consideration consists of an upfront cash payment of €42 million and an additional earn-out amount between €15 and €43 million, depending on the gross profit of the acquired business over the period 2022–2024, to be paid out in 2025.

In accordance with IFRS 3, the purchase price was provisionally allocated to identifiable assets and liabilities acquired, pending completion of an independent valuation process. The provisional non-tax-deductible goodwill amounts to €71 million.

The acquisition of Vestkorn Milling did not yet contribute to net sales and Adjusted EBITDA in 2021. If the acquisition had occurred on 1 January 2021, additional net sales would have been €27 million, operating profit €1 million and Adjusted EBITDA €2 million.

Finalization PPA Erber

In the reporting year, the Purchase Price Allocation (PPA) related to the Erber acquisition in 2020 was finalized, resulting in an additional allocation of €37 million to intangible assets, mainly for customer relations and technology, a decrease of the goodwill amount by €51 million and an increase of other net assets by €14 million. The comparative information for the reference year has been adjusted for these measurement period adjustments. As the impact on the profit and loss account is negligible, no comparative information has been adjusted.

Valuation techniques intangible assets

Part of a Purchase Price Allocation is the recognition of intangible assets which are recognized apart from goodwill. The valuation techniques DSM used for measuring the fair value of these intangible assets in 2021 were as follows:

The acquired technology was valued by applying the multi-period excess earnings method (MEEM) considering the present value of net cash flows expected to be generated by the technology and customer relationships; or by applying the relief-from-royalty method, an income approach whereby the value of an asset is estimated by capitalizing the royalties saved as a result of owning the asset; or by applying the replacement cost approach, measuring the cost necessary to (hypothetically) recreate these intangible assets.

The fair values of customer relationships and supply agreements were determined by applying the MEEM or via the replacement cost approach.

Databases were valued applying the relief-from-royalty method.

Summary acquisitions in 2021

The accounting of the acquisitions upon closing impacted DSM’s consolidated balance sheet 2021 as shown in below table (measured at the date of acquisition).

Divestments

In the reporting year, DSM divested certain businesses in the segments Materials and Innovation for a total consideration of €1,609 million.

Resins & Functional Materials and associated businesses (RFM)

On 1 April 2021, DSM completed the divestment of the Resins & Functional Materials and associated businesses (together ‘RFM’) to Covestro AG. Prior to this divestment, DSM reclassified the results of these businesses (the ‘disposal group’) to ‘discontinued operations’, and reclassified all related assets and liabilities as held for sale on 30 September 2020.

Summary divestments 2021

See below table for the book result of the divestments that took place in 2021.

Impact on comprehensive income

The impact of the business that has been presented as discontinued operations in the income statement and statement of comprehensive income, is presented in the below tables.

The Operating profit in Discontinued operations amounting to €668 million comprises the regular activities of the RFM business in the first quarter of the reporting year (€28 million) and the book profit on the sale of the RFM business on 1 April 2021 (€640 million).

Impact on cash flow statement

The impact of the business that has been included as discontinued operations in the cash flow statement is shown in the following table.

See also Note 26 Notes to the cash flow statement.

Assets and liabilities held for sale

DSM is committed to the sale of its Pentapharm business, and therefore classified end of 2021 the assets and liabilities as held for sale.

Impact on balance sheet

The impact of the reclassification of these activities on the DSM consolidated balance sheet is presented in the following table.

Other changes

In 2021, the following changes in DSM’s share in subsidiaries occurred without impacting the classification of the participations.

See also Note 16 Equity.