Chr. Hansen completes Natural Colors divestment to EQT
01 Apr 2021 --- Chr. Hansen Holding and EQT have completed their deal with the global investment organization acquiring the Danish ingredient supplier’s Natural Colors division. The divestment follows the 2025 Strategy of Chr. Hansen becoming a differentiated bioscience company with a focus on the microbial and fermentation technology platforms.
The divestment of Natural Colors to EQT closed as of March 31, after it was initially announced last September.
The total consideration for the transaction is €800 million (US$939 million) on a cash and debt free basis, which Chr. Hansen has already received.
Transfer of business activities is completed, however, the full legal transition in a few countries will be finalized during the coming months.
Financial implications
The proceeds from the divestment will be used to reduce the leverage of Chr. Hansen.
Also, as announced in connection with the Annual General Meeting on November 25, 2020, Chr. Hansen intends to pay out an extraordinary dividend at least equal to a normalized ordinary dividend for 2019/20. It will initiate the standard process for paying out extraordinary dividends.
More information on the timing of the extraordinary dividend can be expected in connection with the Q2 announcement in mid-April.
The one-off profits from the transaction, which is the difference between the book value of the transferred assets and liabilities and the transaction value received, will be accounted for as part of the profits from discontinued operations in Q3, notes the company.
The impact is estimated to be around €650 million (US$763 million) after taxes and transaction costs associated with the divestment.
The divestment covers business operations with asset transfers in more than 30 countries including transfer of five separate corporate entities and around 600 employees.
Consistent with the transaction agreement, Chr. Hansen undertakes to provide various transition services for a period of up to two years to Natural Colors/EQT to ensure continuity of Natural Color business activities.
The costs associated with Chr. Hansen corporate activities in Natural Colors that are not transferred to EQT will be partly covered by the fees from the transition services agreements, and will not impact the guidance on EBIT margin b.s.i. for this year.
Last October, Chr. Hansen Natural Colors inaugurated an R&D center to ramp up pigment, formulation and application capabilities in Montpellier, France, and pioneer new natural color solutions. As a result of the new center, the supplier forecasts major growth for its color portfolio, particularly for green, blue and brown hues.
In February, Chr. Hansen Natural Colors also appointed Barentz as its strategic partner to distribute its natural color portfolio in South Africa and Zimbabwe.
Edited by Gaynor Selby
