The next time you see Walter Borisenok, slap him a high-five.
The president and CEO of Fortitech Inc. in Schenectady just negotiated a $634 million cash deal to be acquired by Royal DSM N.V., a Dutch conglomerate looking to grow larger in the life sciences field.
The buyout, expected to close by year’s end, is quite a feather in the cap of Borisenok, who started small in Rotterdam in 1986 and now has a global firm with manufacturing plants in Denmark, Poland, Brazil and Malaysia — along with two in the United States — and sales offices in China and Mexico. The company employs 520 people, many of them locally.
As the story goes, Borisenok, a SUNY-Plattsburgh grad, was working at Beech-Nut Nutrition Corp. in Canajoharie and having trouble securing the nutrients to be added to the baby food made at the plant. So with seed money from his father and the help of a chief scientist/co-founder, he started Fortitech.
The company built its reputation in “pre-mixes” — a niche that left outsiders scratching their heads. But its prime work was custom-blending various nutrients (vitamins, minerals, amino acids) and food ingredients (colors, extracts, flavors, seasonings) to manufacturer specifications for inclusion in cereals, sports drinks, baby formula, juices and waters, energy bars, candy and spreads.
Fortitech came on the scene just as manufacturers were turning to outside firms for the kind of research and development in additives they used to do in-house. Demand also was growing for foods that were healthy and convenient for fast-paced living.
Meanwhile, DSM, founded in 1902 as a Dutch coal-mining company, had transitioned over the years into a global powerhouse in health, nutrition and materials products that employed 22,000 and had $11.5 billion in annual sales.
This year, DSM has been on an acquisitions tear, beefing up its nutrition and pharma lines with companies specializing in fish-oil-derived nutritional products, supplements for pasture-raised beef and dairy cattle, and enzymes for the dairy and meat industries.
Fortitech’s specialty of custom-blending adds a missing link at DSM, allowing the Dutch company to accelerate its strategy “to become a full solutions provider in food ingredient blends,” it said in the news release announcing the acquisition.
That could help DSM stand out in the food-additives market, which a study this week from market- and technology-trends watcher Global Industry Analysts Inc. described as “highly fragmented, with a wide range of products and large number of players addressing a single end-user, the food industry.” The report projected the food-additives market will reach $37.7 billion by 2018.
A Fortitech spokesman declined to take questions about the acquisition this week, saying his company would grant no interviews or say anything beyond the announcement before the deal closes.
It would be easy to look at the acquisition of Fortitech as just another example of a homegrown manufacturer becoming the prey, not the hunter, in big-game business. Remember the buyout of MapInfo by Pitney Bowes? Intermagnetics General by Royal Philips Electronics? SuperPower by Furukawa Electric?
Instead, we need to cheer Fortitech. In textbook fashion, it identified a need to be met, developed a business plan around that solution, grew steadily and expanded as demand dictated. Two years ago, outside investors took a minority stake in the company, paving the way for an introduction to DSM that now will reward Borisenok and his early partners handsomely.
Isn’t that the way success in business is supposed to work?
Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at email@example.com.