Provimi, the Dutch animal food maker owned by Permira, has attracted several international bidders in the first round of an auction, a person familiar with the situation told Dow Jones Newswires Thursday.

Dutch rival Nutreco NV (NUO.AE) and Dutch life and materials sciences company Royal DSM NV (DSM.AE) submitted bids earlier this week, the person said. Chinese agriculture firm New Hope Group Co. and U.S.-based Cargill Inc. also put in bids, according to press reports.

The sale is being run by JPMorgan Chase (JPM) and second round bids are due at the end of July.

Based in Rotterdam, Provimi posted profit before tax of EUR65.1 million on sales of EUR1.6 billion for the year ended Dec. 31, 2010.

The company has been valued at up to EUR1.8 billion which could deter the Dutch bidders. Analysts say that Nutreco can only pay a maximum price of EUR1.3 billion, while market observers see the strategic rationale of DSM buying Provimi but question the price.

Like Provimi, DSM produces ingredients and additives for animal feed, but acquiring Provimi would enhance its exposure to emerging markets, such as India, Brazil and Russia, where Provimi has a strong position.

After the acquisition of U.S. nutrition company Martek Biosciences for $1.09 billion in cash in December last year, DSM said its cash position of over EUR2 billion allows it to do other large acquisitions with a similar size as Martek.

DSM's enterprise value/earnings before interest, tax, depreciation and amortization, or Ebitda, ratio stood at 6 at the end of 2010, compared with 11.7 for Provimi if sold for EUR1.8 billion, making the price excessive, a KBC Securities analyst said.

In addition, the acquisition would have a dilutive effect on DSM's margins given Provimi's Ebitda margin of 9.5% in 2010, compared with 23.4% for DSM's nutrition division.

-By Marietta Cauchi and Anna Marij van der Meulen, Dow Jones Newswires; +44 207 842 9241; marietta.cauchi@dowjones.com