Tate & Lyle to acquire Chinese dietary fiber business
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% of the global dietary fibers market, which is forecast to grow at around 6% per annum. 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.
The acquisition of Quantum strengthens Tate & Lyle’s position in dietary fibers, and expands its ability to provide added-fiber 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 the food and drink sector.
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 will be paid in cash for 100% of the equity interests in Quantum. For the 11 months ended November 30, 2021, Quantum’s revenue was $46m and EBITDA was $14m. 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 fibers 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.”
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.”
As of November 30, 2021, the gross assets of Quantum were $41m.
On a pro forma 12-months basis, calculated by extrapolating the financial information for the 11 months to November 30, 2021, Quantum has annual revenue of $50m and EBITDA of $15m.