Corbion ahead on restructuring but open to dialogue

SAN FRANCISCO – With a large investor calling for Corbion NV to explore strategic alternatives, the company is committed to moving forward on a far-reaching restructuring program.

While Amsterdam-based Corbion first announced the restructuring plan in October, launching it in response to soft weak financial results, details about the plan were shared in response to a letter from San Francisco-based Inclusive Capital Partners. The investment firm holds a 10% stake in Corbion, accumulated over the past two years. In its response, Corbion left the door open to alternative courses saying it would “consider Inclusive’s suggestions.”

Taking the company private was among options Corbion could consider, Inclusive Capital said.

“As a private business or part of a bigger company, Corbion would be freed from scrutiny of its financials by competitors and customers, alleviated of the growing costs associated with a public listing and empowered with greater flexibility around capital allocation,” Inclusive Capital Partners said in the letter directed to Mathieu Vrijsen, chair of Corbion’s supervisory board. “Management would similarly be relieved of the time and energy required of quarterly reporting cycles and the constraints associated with public market ‘short-term-ism.’ To that end, we strongly urge the board to engage advisers for a comprehensive review and openly explore interest from partners who can help Corbion deliver an impact for all stakeholders.”

Inclusive Capital Partners calculated Corbion has invested over €1 billion ($1.1 billion) in capital expenditures and investments in associated/joint ventures since 2015. Yet Corbion’s shares are near five-year lows and have underperformed the Amsterdam AEX index by more than 80% over the five years, according to Inclusive Capital Partners.

“Corbion’s portfolio is best analyzed through the lens of a sum-of-the parts analysis, which we believe points to a fundamental value of nearly €30 ($33) relative to the company’s (about) €17 current share price,” Inclusive Capital Partners said. “We believe Corbion’s complexity relative to its size serves as a significant impediment to thoughtful piece-by-piece evaluations of its various value drivers.”

In its response, Corbion focused on its restructuring program first announced in October in connection with its third-quarter management statement. At the time, the company said the program was intended to “accelerate significant positive free cash flow delivery” and would include a “full review” to lower operating expenses and to hone its capital program and improve working capital. In the response to Inclusive Capital, Corbion said the benefits from the restructuring would be reflected in company results beginning in 2024. The review will examine Corbion’s position in polylactic acid (PLA), the development of an algae ingredients’ road map for 2025-30 and a continued focus on its high-growth, high-value biomedical business. Corbion will present details of its plans on Jan. 31, 2024.

“The supervisory board and management of Corbion value open dialogue with shareholders and welcome their constructive input,” Corbion said. “We have engaged, and will continue to engage, with Inclusive in a manner consistent with that approach. We remain focused on delivering long-term value to our shareholders and stakeholders, will continue to take actions to achieve that objective and will consider Inclusive’s suggestions.”

Corbion could grow through its algae business, a gypsum-free lactic acid facility being constructed in Thailand and medical biopolymers, according to Inclusive Capital Partners.

“Corbion’s role in replacing fossil fuels in food preservatives and packaging, and the role of its burgeoning algae solution to address human and ocean health, may be better pursued, we believe, with a different capital and ownership structure,” Inclusive Capital Partners said.

While details about Corbion’s planned restructuring program will not be shared before the end of January, the company’s food business, including a large bakery supply business, has been a source of stability and strength in recent years, even as the company has ventured into new enterprises.