Tate & Lyle bets on prebiotic potential as Quantum deal finalized




June 09, 2022 — Recognizing increased activity in the gut health oligosaccharide market, food ingredient supplier Tate & Lyle has completed the acquisition of Quantum Hi-Tech, a key prebiotic dietary fiber business located in Guangdong, China. Quantum engages in the research, development, production and sale of fructo-oligosaccharides (FOS) and galacto-oligosaccharides (GOS).

Together, FOS (derived from sucrose) and GOS (from milk sugar/lactose) account for about 25% of the global dietary fiber market, which is expected to grow about 6% annually, according to Tate & Lyle.

“This acquisition significantly strengthens our fortification platform and our position as a leading global player in dietary fiber, while expanding our presence in China and Asia,” commented Nick Hampton, CEO of Tate & Lyle.

The acquisition expands Tate & Lyle’s added fiber business in China and Asia, targeting gut health across various categories including dairy, beverages, bakery and nutrition. Gut health was a notable star in the company’s trend forecast.

In China, which currently accounts for the majority of Quantum sales, the FOS and GOS market is expected to grow by around 10% per year.Oligosaccharides in the spotlight
In China, which currently accounts for the majority of Quantum sales, the FOS and GOS market is expected to grow by around 10% per year.

Prebiotic oligosaccharides are a type of dietary fiber that nourish healthy bacteria in the gut and have been shown in studies to affect the balance of gut microbiota, leading to improved gut health and mental well-being .

Commercial interest in the functional oligosaccharides market has grown globally over the past year as more and more research sheds light on their effectiveness. For example, human milk oligosaccharides (HMOs) have been shown to selectively promote the growth of beneficial species and subspecies of Bifidobacteria in the digestive system of babies.

Last October, China’s Ministry of Agriculture and Rural Affairs confirmed the safety of six manufacturing strains to produce HMOs, opening the regulatory path for this variety of oligosaccharides.

Most recently, functional ingredient innovator FrieslandCampina Ingredients introduced the “highest purity” Biotis GOS-OP High Purity prebiotic to its Biotis galacto-oligosaccharides portfolio for adult gut and brain health, in addition to solutions the company’s infant nutrition prebiotics.

“FOS and GOS fibers are highly complementary to our existing fiber portfolio and will allow us to offer a wider range of solutions to our customers in key markets,” Tate & Lyle’s Hampton comments on the new acquisition.

Quantum financial performance
The transaction is subject to shareholder approval of ChemPartner, a public listed company in China, of which Quantum is a wholly owned subsidiary.

Upon completion, consideration will be paid in cash for 100% of the interests in Quantum.

For the 11 months ended November 30, 2021, Quantum generated revenues of US$46 million and EBITDA of US$14 million.

Prebiotic oligosaccharides are a type of dietary fiber that feed healthy bacteria in the gut.The acquisition is expected to be accretive to Tate & Lyle’s revenue growth and EBITDA margin in the first year of ownership.

The Quantum management team will join Tate & Lyle upon completion. Closing of the transaction is expected to occur in the second quarter of calendar year 2022.

“Tate & Lyle, with its global customer base, strong focus on R&D and strong fiber portfolio, is the ideal company to take Quantum to the next stage of its development,” concludes Zeng Xianwei, Chairman of the Board of Directors. from ChemPartner.

“Historic year” for Tate & Lyle
The previous financial year was hailed as a “historic year” for Tate & Lyle. In its latest review, the company reports double-digit organic revenue growth across all regions and double-digit profit growth despite significant inflation across the supply chain.

The company reported revenue of £1.4 billion (US$1.7 billion) in 2021, up 18% from the previous year.

The group focused on growing its specialty catering solutions business, seeing volume growth of +5% in this segment, with a “particularly strong” performance from Asia, the Middle East, Africa and Latin America. Revenue in this segment increased by 19% with double-digit organic growth in all regions.

During the year, Tate & Lyle’s revenues in North America from bakery and snacks grew 19% and 12% in beverages, supported by demand for its fiber and stevia.

In Europe, dairy products increased by 14%, helped by demand for Clean Label solutions. In Asia, the Middle East, Africa and Latin America, revenue increased 25% with good progress in priority business categories as customers continued to demand solutions that reduce sugar, calories and fat in their products.

The company also saw “strong performance” in its sucralose business, with volume up 15%, driven by strong beverage demand. Sucralose benefited from both a recovery in out-of-home consumption leading to strong growth in beverage volumes and increased volume from the optimization of production at the Tate & Lyle plant in McIntosh, Alabama .

Sales in the sucralose segment grew by 13%, with higher volumes partially offset by the customer mix. Profit rose 15% to £61 million (US$76.4 million).

Following the sale of its majority stake in personal care and nutrition business Primient last July, Tate & Lyle received gross cash proceeds of approximately £1.1 billion (£1.4 billion), taking into account estimates of cash, debt and debt-like items and working capital balances at completion.

After one-time transaction and separation costs, as well as estimated tax liabilities associated with the transaction, net proceeds were approximately £0.9 billion (US$1.2 billion).

By Benjamin Ferrer

This feature is provided by FoodIngredientsFirstsister site of, NutritionInsight.

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