Novozymes shares slide after merger with rival Chr. Hansen unveiled

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By Scott Kanowsky 

AiVIF.com -- Shares in Novozymes A/S B (OTC:NVZMY) (CSE:NZYMb) slumped towards the bottom of the pan-European Stoxx 600 on Monday after the world's largest industrial enzymes maker announced a merger with Chr. Hansen Holding A/S (CSE:CHRH).

Under the terms of the deal, Novozymes will buy its Danish rival at DKK 660.55 (DKK 1 = $0.14) per Chr. Hansen share, reflecting an implied premium of 49% to the stock's closing price on Friday. The combined group is seen bringing in annual revenue of approximately €3.5 billion (€1 = $1.0568), with annual revenue synergies estimated at €200M.

The merger is still subject to approval at extraordinary general meetings of both Novozymes and Chr. Hansen, as well as a sign-off from regulators. It is expected to close in the fourth quarter of 2023 or the first quarter of 2024, after which Chr. Hansen will be dissolved.

“The combination of two strategically complementary companies with a shared purpose and advanced capabilities will show the world the true power of biosolutions. Today’s announcement is fully aligned with Novozymes’ strategy and is another step towards unlocking additional growth opportunities," said Novozymes president and chief executive officer Ester Baiget, who is slated to helm the combined group, in a statement.

The move will help boost Novozymes' presence in the food industry, where Chr. Hansen's operations are centered on making enzymes and microbials for the sector.

Analysts at Credit Suisse argued that the deal is negative for Novozymes, principally due to the "very high" implied premium paid by the company to go forward with the tie-up.

However, they called it "very positive" for Chr. Hansen, adding that a merger between it and Novozymes "seems sensible in a consolidating sector."

Shares in Chr. Hansen soared by nearly 20% in the wake of the announcement.