The Competition Commission of Pakistan (CCP) has approved the acquisition of controlling equity interests in DSM-Firmenich’s Animal Nutrition and Health Business by four investment vehicles indirectly owned and financed by CVC Fund IX, following a Phase-I competition assessment.
The transaction was reviewed under Section 11 of the Competition Act, 2010 because DSM’s Animal Nutrition and Health Business operates in Pakistan through DSM-Firmenich Pakistan (Private) Limited. The review assessed whether the acquisition could create or strengthen a dominant position or otherwise raise competition concerns in relevant Pakistani markets.
CCP Approves CVC Fund IX Acquisition After Competition Review
Under the transaction, DSM B.V., a Netherlands-based company and wholly owned subsidiary of Swiss-based DSM-Firmenich AG, will reorganise its Animal Nutrition and Health Business into two separate entities: SpecialtyCo Business and EssentialCo Business.
DSM-Firmenich Group will retain non-controlling equity interests, while the CVC-backed acquirers will obtain controlling equity interests and corresponding voting rights in both entities.
The acquisition involves four newly incorporated investment vehicles: Specialty Bidco B.V. and Essential Bidco B.V., incorporated in the Netherlands, and Specialty (U.S.) Bidco Inc. and Essential (U.S.) Bidco Inc., incorporated in Delaware, USA.
All four investment vehicles are indirectly owned and financed by CVC Fund IX, which is managed and advised by affiliates of CVC Capital Partners plc.
DSM Animal Nutrition Business Covers Multiple Product Segments
DSM’s Animal Nutrition and Health Business produces animal nutrition ingredients across a range of essential products and services.
Its portfolio includes vitamins and carotenoids, performance solutions, premixes, precision services and aroma ingredients.
The business operates in Pakistan through DSM-Firmenich Pakistan (Private) Limited, making the acquisition subject to review by Pakistan’s competition regulator.
CCP Finds No Competition Overlap in Pakistan
The CCP’s assessment found that CVC Fund IX, the acquiring entities and their controlled portfolio companies are not active in Pakistan in any of the relevant product markets in which DSM’s business operates.
As a result, the Commission found no horizontal overlap between the businesses involved in the transaction.
The assessment also found no vertical relationship between the acquiring parties and DSM’s relevant business operations in Pakistan. Consequently, the transaction is not expected to increase market share or market concentration in the affected markets.
Acquisition Unlikely to Harm Competition
Following its Phase-I assessment, the CCP concluded that the transaction is unlikely to create entry barriers, materially enhance market power or substantially lessen competition in Pakistan.
The Commission therefore authorised the acquisition under the Competition Act, 2010.
The decision provides regulatory clearance for the transaction in Pakistan while allowing the restructuring of DSM-Firmenich’s Animal Nutrition and Health Business to proceed from a competition-law perspective.
CCP Highlights Investor-Friendly Regulatory Environment
The CCP said it remains committed to facilitating investment, supporting business growth and promoting a competitive and investor-friendly environment in Pakistan.
The Commission also emphasised the importance of an efficient and transparent merger review process in providing regulatory certainty to investors and businesses.
According to the CCP, such regulatory processes can help enable investments that contribute to economic growth, innovation and consumer welfare.
Final Takeaway
The CCP’s approval removes a key regulatory hurdle for CVC Fund IX’s acquisition of controlling interests in DSM-Firmenich’s Animal Nutrition and Health Business in Pakistan.
The Commission’s Phase-I assessment found no horizontal overlap or vertical relationship between the acquiring entities and DSM’s relevant business in Pakistan. On that basis, the transaction was considered unlikely to materially affect competition or market concentration.