Dutch chemicals group DSM is tipped to unveil new growth targets next week as part of a strategy update while analysts warn the  company must move swiftly on acquisitions or risk being taken over itself.

In two previous five-year strategy updates, DSM signalled a change away from bulk chemicals to higher-margin life sciences and materials sciences and is now nearing the end of its divestments of non-core base chemicals units.

ABN AMRO analyst Mark van der Geest expects DSM's strategy update will focus more on growth, both autonomous and via acquisitions, rather than portfolio change. He expects small purchases as DSM chases emerging markets and innovation growth.

With a strong balance sheet and net debt of just €601 million ($786.5 million) at end-June, DSM has left open the option of both large and small deals to beef itself up again.

"DSM needs to move forward quickly in order to prevent becoming prey itself," Van der Geest said, adding that Belgium's Solvay, Germany's BASF and DuPont in the U.S. are potential predators.

Estimating DSM's war chest at up to €1.5 to 2.0 billion, ING analyst Jan Hein de Vroe said DSM is unlikely to go on a value-destroying shopping spree.

It passed up the chance to acquire for about nine times EV/EBITDA food ingredients company Chr. Hansen, listed in Denmark in June by private equity owner PAI.

De Vroe expects the firm to focus on the juncture between life sciences and materials sciences, such as in biotechnology or white biotech (industrial biotechnology).

"We could see further investments in the bio plastics/bio fuels area. However, sizeable targets in this field are scarce," he said.

Under its Vision 2010 strategy, DSM had given margin targets for each of its units, but after the credit crisis hit and the recession set in, the firm warned that some targets might not be met. It kept confidence in its nutrition unit's target, however.

Analysts are now expecting DSM, the world's largest vitamins maker, to raise next week its earnings before interest, tax, depreciation and amortisation (EBITDA) margin target for the nutrition business to 20% from 18%.

The EBITDA margin targets for its three remaining divisions - pharma, performance materials and polymer intermediates - are expected to remain unchanged.

ING's De Vroe said he expects earnings per share growth and returns on capital employed will play a larger role in DSM's Vision 2015 targets.

Rabo Securities analyst Fabian Smeets said DSM, which competes with Japan's Teijin with its performance fibre Dyneema, will likely reiterate its growth ambitions and might also issue an operating profit target for 2010.

Smeets is not expecting, however, a radical solution or sale of DSM's ailing pharma business, which lacks scale and is seeking a partner as it faces structural overcapacity.

"They should divest it, but it will not happen," he added.