REG - Tate & Lyle PLC - Acquisition

Tate & LyleAnnouncement

31/03/2022 07:00

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RNS Number : 6742G  Tate & Lyle PLC  31 March 2022

 

THIS ANNOUNCEMENT RELATES TO THE DISCLOSURE OF INFORMATION THAT QUALIFIED OR
MAY HAVE QUALIFIED AS INSIDE INFORMATION WITHIN THE MEANING OF ARTICLE 7 OF
THE MARKET ABUSE REGULATION (EU) 596/2014 AS IT FORMS PART OF DOMESTIC LAW IN
THE UNITED KINGDOM BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018

 

FOR IMMEDIATE RELEASE

 

Tate & Lyle PLC

 

Tate & Lyle to acquire leading dietary fibre business in China

 

London, UK, 31 March 2022 - Tate & Lyle PLC (Tate & Lyle), a leading
global provider of food and beverage ingredients and solutions, announces that
it has signed an agreement to acquire Quantum Hi-Tech (Guangdong) Biological
Co., Ltd (Quantum), a leading prebiotic dietary fibre business in China from
ChemPartner Pharmatech Co., Ltd (ChemPartner) for a total consideration of
US$237 million.

 

Key highlights:

·     Fully aligned to strategy to become growth-focused food and
beverage solutions business

·     Strengthens position as a leading global player in fast-growing
global dietary fibres market

·     Adds new, speciality and complementary products to portfolio

·     Brings strong R&D expertise with proprietary manufacturing
processes and technologies

·     Strengthens fortification platform and enhances integrated
solutions capabilities

·     Significantly extends presence and customer offering in China and
Asia

·     Expected to be accretive to revenue growth and EBITDA margin in
first year of ownership

·     Completion expected in the second quarter of 2022 calendar year.

 

Quantum engages in the research, development, production and sale of
fructo-oligosaccharides (FOS) and galacto-oligosaccharides (GOS).  Together,
FOS (from sucrose) and GOS (from milk sugar/lactose) represent around 25%(2)
of the global dietary fibres market which is forecast to grow at around 6% per
annum(3).  In China, which currently represents the majority of Quantum's
sales, the FOS and GOS market is forecast to grow at around 10% per annum(3).

 

The acquisition of Quantum significantly strengthens Tate & Lyle's
position as a leading global player in dietary fibres, bringing a high-quality
portfolio of speciality fibres, strong R&D capabilities and proprietary
manufacturing processes and technologies.  The acquisition expands Tate &
Lyle's ability to provide added-fibre solutions for its customers across a
range of categories including dairy, beverages, bakery and nutrition
(including infant nutrition), and to meet growing consumer interest in gut
health.  It also significantly expands Tate & Lyle's presence in China
and Asia, and extends its capabilities to create solutions across food and
drink utilising its leading speciality ingredient portfolio.

 

The transaction is subject to approval by the shareholders of ChemPartner, a
public company listed in China, of which Quantum is a wholly-owned subsidiary.
 At completion, consideration(4) will be paid in cash for 100% of the equity
interests in Quantum.  For the 11 months ended 30 November 2021, Quantum
generated revenue of US$46 million and EBITDA of US$14 million(5).  The
acquisition is expected to be accretive to revenue growth and EBITDA margin
for Tate & Lyle in the first year of ownership.

 

Quantum produces its range of FOS and GOS fibres at its production site in
Guangdong Province, Southern China. The management team of Quantum will join
Tate & Lyle at completion.  Closing of the transaction is expected to
occur in the second quarter of calendar year 2022.

 

Nick Hampton, Chief Executive at Tate & Lyle, said:

"We are delighted to announce the agreement to acquire Quantum, a leader in
prebiotic dietary fibres and a business recognised for its high-quality
ingredients and solutions. This acquisition significantly strengthens our
fortification capabilities and expands our customer offering in key food and
drink categories. FOS and GOS are highly complementary to our existing fibre
portfolio and will enable us to offer a broader range of solutions to our
customers.  The acquisition is also very much in line with our purpose to
support healthy living by improving gut health, and driving sugar and calorie
reduction and fibre fortification for consumers across the world."

 

Mr. Zeng Xianwei, Chairman of the Board of ChemPartner, said:

"We are proud of the Quantum business we have built over the last 20 years,
providing high-quality products to support healthier living for people across
China and beyond.  Tate & Lyle, with its global customer reach, strong
focus on R&D, and strong fibre portfolio, is the ideal company to take
Quantum on the next stage of its development.  I wish them and the management
team at Quantum success in the future."

 

 

ENDS

 

For more information contact Tate & Lyle PLC:

 

Investor Relations:

Christopher Marsh, VP, Investor Relations

Mobile: +44 (0) 7796 192 688

 

Media:

Nick Hasell, FTI Consulting

Mobile: +44 (0) 7825 523 383

 

Notes to Editors

 

1.  Tate & Lyle already offers a broad selection of soluble fibre
solutions, such as its PROMITOR(®) Soluble Fibre and STALITE(®)
Polydextrose, with distinctive benefits for many food and beverage categories.
These enable sugar and calorie reduction as well as fibre fortification,
helping to support healthier lifestyles and provide nutritional benefits,
while maintaining great taste.

2.    Company analysis from sources including Maia Research Global Short
Chain Fructo-oligosaccharides Market Research Report 2021

3.   Volume growth (2021 - 2026); Company analysis including Maia Research
Global Short Chain Fructo-oligosaccharides Market Research Report 2021

4.    Consideration is on a cash-free, debt-free basis, and subject to
customary working capital adjustments

5.    Depreciation and amortisation charges together for the 11 months ended
30 November 2021 were US$2 million

6.    As at 30 November 2021, the gross assets of Quantum were US$41
million.

7.   On a pro forma 12 months basis, calculated by extrapolating the
financial information for the 11 months to 30 November 2021, Quantum has
annual revenue of US$50 million and EBITDA of US$15 million.

 

 

About Tate & Lyle

Tate & Lyle PLC is a leading global provider of food and beverage
ingredients and solutions. Supported by our 160-year history of ingredient
innovation, we partner with customers to provide consumers with healthier and
tastier choices when they eat and drink. We are proud that millions of people
around the world consume products containing our ingredients every day.

 

Through our expertise in sweetening, mouthfeel and fibre fortification, our
Food & Beverage Solutions business develops solutions which reduce sugar,
calories and fat, add fibre, and provide texture and stability in categories
including beverages, dairy, bakery, soups, sauces and dressings. Our Primary
Products business produces nutritive sweeteners, industrial starches used in
paper and packaging, acidulants and products used for animal nutrition.

 

We have around 4,200 employees working in more than 60 locations across 30
countries. Tate & Lyle's purpose is Improving Lives for Generations and
through our purpose we believe we can successfully grow our business and have
a positive impact on society. We live our purpose in three ways, by supporting
healthy living, building thriving communities and caring for our planet.

 

Tate & Lyle is listed on the London Stock Exchange under the symbol
TATE.L. American Depositary Receipts trade under TATYY. In the year to 31
March 2021, Tate & Lyle sales totalled £2.8 billion. For more
information, please visit https://www.tateandlyle.com or follow Tate &
Lyle on Twitter, Linkedin or Facebook.

 

 

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