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FMC tipped to make hydrocolloid acquisition

By Sarah Hills , 04-Aug-2011

FMC Corporation is looking to expand its food ingredients portfolio as it strengthens its already strong position in the hydrocolloids market.

The company, which has just released its second quarter results, is also tipped to be on the look-out for acquisitions, according to IMR International’s hydrocolloid expert, Dennis Seisun.

In a briefing on its latest results, Michael Wilson, president, FMC Specialty Chemicals Group, said FMC “must invest in core products to further strengthen our leadership positions” and highlighted the importance of alginate and MCC (microcrystalline cellulose).

Some of the food industry’s most frequently used hydrocolloids include agar, alginates, Arabic, pectin, Xanthan and MCC.

Hydrocolloids are used to texturise and stabilise food products from dressings to ice cream, but are sensitive to spiralling raw material costs.

Wilson added: “We are investing to expand capacity to support growth. We have recently completed an expansion of our Cork, Ireland MCC plant are currently expanding our MCC capacity in Newark, Delaware and our alginate capacity in Norway.

“We're also evaluating a project to build greenfield MCC capacity in Asia.

“Our innovation investments include significant focus to introduce new higher functionality attributes to our key products as well as process technology advancements to improve cost and quality.”

Texturants

Wilson also revealed that to expand FMC’s portfolio in food ingredients, it was “pursuing several organic and external strategies that would broaden our position into other value-added food ingredients”.

He said: “Our deep applications knowledge in texturants provides the foundation for us to leverage our capabilities into adjacent texture ingredients.

“We're also selectively evaluating specialty ingredient opportunities that can move us outside of texture, broadening our capability to serve our customers in key markets, such as dairy and beverage.”

FoodNavigator.com asked FMC to expand on this but it declined.

Danisco division

However, Seisun said: “It is a clear sign they are looking for acquisitions” and speculated that one target might be the hydrocolloid business of Danisco.

DuPont recently acquired Danisco for $6.49bn but Seisun believes that the US chemical group was more interested in Danisco’s enzyme business and “might divest the hydrocolloid business of Danisco”.

This was because, he said, “it doesn’t seem to fit with what Dupont is currently doing, in which case FMC would be one of the most likely bidders”.

Seisun added: “This effort in MCC and alginate would reflect FMC’s efforts to maintain their clear leadership and global position as they are by far number one in both.”

He described the hydrocolloids market as “healthy” - despite prices going up, largely due to raw material costs.

Potential in MCC

But he said there was particular growth potential in MCC, especially in reduced fat applications.

FMC Q2 revenue in Specialty Chemicals, which is made up of its BioPolymer and Lithium businesses, was $228.5m, up six per cent on the same quarter last year.

In BioPolymer, sales gains in food ingredients were driven by dairy and beverage markets in Asia, particularly China.