DSM-Firmenich: Initiating Coverage With a Wide Economic Moat and a EUR 140 Fair Value Estimate

We are initiating coverage of DSM-Firmenich with a EUR 140 per share fair value estimate and a wide economic moat rating. The company was formed following the merger between narrow-moat DSM and privately held Firmenich. It combines DSM’s capabilities in nutrition, health, and biosciences with Firmenich’s leading position in the flavor and fragrance (F&F) industry (as one of the top four players, along with wide-moats Givaudan, Symrise, and IFF). We believe the merger created a powerhouse in the consumer specialty ingredients market, enjoying switching costs and intangible assets across the majority of the segments.