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Degussa deal finally sealed with Cargill

Months of speculation finally ended today with the outcome that most industry observers had expected all along.

Cargill, the new big boys on the hydrocolloids block, nailed their colours even more firmly to the hydrocolloids mast by gobbling up Degussa's food ingredients division. The new acquisition, the largest by Degussa since their acquisition of Cerestar in 2002, will add new products to their portfolio including carrageenan as well as some production capacity and an estabilished market presence in xanthan and pectin. The companies have an overlapping interest in xanthan with Degussa bringing their own production facilities whereas Cargill recently sealed a joint venture with a Chinese producer.

Probably the most interesting difference this makes in the hydrocolloids world is the strong position Cargill now has in pectin. Pectin remains one of the few hydrocolloids that shows strong profitability and has not suffered price erosion from new entrants into the market. Cargill only recently purchased the Citrico business with its 4500 tpa pectin capacity plant.

Overall this is good news for the people working in the Degussa food ingredients business. Over the last few years the business has been bought and sold several times and has undergone more name changes than most of us can keep up with. The acquisition by Cargill should provide some much needed stability and direction for the business.