Treatt PLC (LSE:TET), the UK-listed supplier of natural extracts and ingredients, has agreed to be acquired for £156.6 million cash by Natara Global, a company controlled by private equity firm Exponent.
Shareholders will receive 260p in cash per share, representing a 16% premium to Friday’s closing price.
However, many of them will note that this offer price is well below levels seen earlier this year before a profit warning in late July, with the shares having topped 450p in January.
The deal will be carried out via a court-sanctioned scheme of arrangement and is expected to close later this year, subject to shareholder and regulatory approvals in the UK, US, Ireland and Austria.
Natara, a global aroma ingredients producer, said the combination with Treatt would create a leading platform in the flavours and fragrances sector, with complementary product portfolios and global reach.
"Given the macroeconomic headwinds affecting the industry, including competitive pressures, subdued North American consumer confidence, a weaker US dollar and volatility in citrus prices, combined with Treatt's specific trading challenges, Natara believes Treatt is at a critical inflection point," said Exponent in the announcement.
"To restore performance and unlock long-term growth, Natara believes the required investment, capital commitments and operational measures can be more effectively achieved under private ownership, allowing the business the flexibility to execute its strategy away from the uncertainty and ongoing costs associated with public markets."
Treatt chair Vijay Thakrar said: "Treatt has many opportunities for growth ahead. While we have a clear strategy to capture these growth opportunities, a combination with Natara would provide the investment and scale that will enable us to do this faster, more extensively, and with lower execution risk than we could achieve on a standalone basis."
He said the board believes that the proposed offer from is "fair and reasonable, and an opportunity for Treatt's shareholders to realise their entire investment with certain value in cash" and so it has been unanimously recommended.