Tate & Lyle strengthens presence in China with US$237M Quantum acquisition
31 Mar 2022 --- UK-based provider of F&B ingredients Tate & Lyle is acquiring China-based prebiotic dietary fiber company Quantum from ChemPartner for US$237 million. The acquisition will advance Tate & Lyle’s footprint in China and Asia and its ability to supply added-fiber solutions for its customers across sectors, including dairy and nutrition.
“This acquisition significantly strengthens our fortification capabilities and expands our customer offering in essential food and drink categories, says Nick Hampton, chief executive at Tate & Lyle.
Quantum specializes in fructo-oligosaccharides (FOS) and galacto-oligosaccharides (GOS) research, development, production and sale.
“FOS and GOS are highly complementary to our existing fiber portfolio and will enable us to offer our customers a broader range of solutions. The acquisition is also in line with supporting healthy living by improving gut health and driving sugar and calorie reduction and fiber fortification for consumers worldwide.”
FOS and GOS potential in the fiber market
FOS (from sucrose) and GOS (from milk sugar/lactose) together account for about 25% of the worldwide dietary fibers market, which is expected to expand at 6% per year.
The FOS and GOS market in China, which presently accounts for the majority of Quantum’s sales, is expected to increase at a rate of approximately 10% per year.
Quantum manufactures its FOS and GOS fibers in Guangdong Province, Southern China.
Tate & Lyle’s acquisition of Quantum will strengthen its position in the dietary fiber space as Quantum has strong R&D capabilities (Credit: Tate & Lyle).
The acquisition will expand Tate & Lyle’s portfolio with new, specialized and complementary products. It will also result in extensive R&D experience and proprietary manufacturing techniques and technology. Lastly, Tate & Lyle’s fortification platform will be enhanced, advancing integrated solutions.
Terms of the agreement
The acquisition is expected to be completed in the second quarter of 2022.
The transaction is subject to shareholder approval of ChemPartner, a Chinese public company of which Quantum is a wholly-owned subsidiary. After the transaction, 100% of Quantum’s equity interests will be paid in cash.
Quantum had revenue of US$46 million and EBITDA of US$14 million in the 11 months up to November 30, 2021. Tate & Lyle expects the acquisition to boost revenue growth and EBITDA margin in the first year of ownership.
Quantum’s management team will join Tate & Lyle when the acquisition is complete.
Delving into fiber endeavors
Tate & Lyle previously partnered with research center APC Microbiome Ireland to investigate the health effects of dietary fibers. The company also conducted a study on fiber’s potential, revealing that for 72% of the UK population, adding fiber to daily diets can reduce the risk of heart disease and Type 2 diabetes.
Tate & Lyle introduced Promitor Soluble Fibre versions, specifically designed to provide a soft texture in protein bars and cookies. The company stated that the fiber is low in sugar and carbohydrates and has a high digestive tolerance.
Edited by Nicole Kerr
