Maryland-based Martek sells its algae-based polyunsaturated fatty acids (PUFAs) primarily to the U.S. infant formula market. The company’s life’sDHA and life’sARA ingredients are used in more than 95% of U.S. baby formula products. Its customers include Danone, Nestle, Kellogg's and General Mills.

For fiscal year 2010 (ended Oct. 31), Martek reported total sales of $450 million. Nutrition Business Journal estimates that Martek’s U.S. ingredient sales totaled $372 in fiscal year 2010.

“We are pleased that this transaction appropriately recognizes the value of Martek’s nutritional ingredients, technology platform, market position and skilled workforce, while providing significant value to our stockholders,”Martek CEO Steve Dubin said in a statement. “We have worked collaboratively with DSM for many years, and we are confident that they share our vision for Martek’s future.”

DSM provides a key ingredient for Martek’s omega-6 ARA. “We have known Martek for more than 15 years and have close ties on the technology and business development sides,” Tanda said.

Although Martek has been working to build a larger international market for its algae-based ingredients, the DSM deal provides the company with access to a well-greased global sales, marketing and application-development engine for growing its business beyond the United States. “[DSM] has a strongly developed global infrastructure based on our vitamin, enzyme and cultures businesses,” said DSM board member Stephen Tanda. “We were looking for a product that we could distribute through that global footprint, and Martek’s business fit the bill well.”

Tanda said DSM is looking to drive further penetration of Martek’s ingredients within the fortified infant formula market outside of the United States. “We are particularly focused on high-growth economies in Asia and Latin America—as well as in Europe, where the penetration of fortified infant formula is still fairly low.”

DSM also wants to add fuel to Martek’s nascent food and beverage business. “We are talking about everything from margarines to yogurts to beverages to cereals,” Tanda said. “More and more of these are fortified with PUFAs, but some of that is fish oil and many companies prefer a vegetarian source—that is where Martek can play. We can do that much more rapidly, particularly outside of the United States, since we have hundreds of people around the world who call on these very customers with our other healthy ingredients.”

Dietary supplements and high-value animal feed ingredients are two other markets that DSM sees as growth pockets for Martek’s algae-based platform, Tanda added. “Martek is also strong in industrial biotechnology and that is an additional value driver,” he said, noting Martek’s partnership with energy giant BP to develop algae-based biofuels. “That fits nicely with our biotech platform.”

DSM plans to retain and build Martek's life'sDHA and life'sARA brands, Tanda said. Martek's Amerifit supplement business, which Martek acquired in 2009, will also remain intact.