Natural Colors transaction closed

Divestment of Natural Colors to EQT closed as of 31 March 2021
The divestment follows the 2025 Strategy of Chr Hansen, becoming a differentiated bioscience company focusing on the microbial and fermentation technology platforms.
The divestment follows the 2025 Strategy of Chr Hansen, becoming a differentiated bioscience company focusing on the microbial and fermentation technology platforms.Photo - Chr Hansen

Chr Hansen Holding A/S and EQT announced the completion of the transaction announced on 26 September 2020, whereby EQT and Chr Hansen Holding A/S entered into an agreement with the purpose of EQT to acquire the Natural Colors division from Chr Hansen Holding A/S.

The divestment follows the 2025 strategy of Chr Hansen, becoming a differentiated bioscience company with a focus on microbial and fermentation technology platforms. The total consideration for the transaction is EUR 800 million (approximately Rs 7000 crore) 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

According to the company's press statement, the divestment proceeds will be used to reduce Chr Hansen's leverage. As announced in connection with the Annual General Meeting on 25 November 2020, Chr Hansen intends to pay out an extraordinary dividend at least equal to a normalized ordinary dividend for 2019-20 and initiate the standard process for paying out extraordinary dividends. More information on the extraordinary dividend timing can be expected in connection with the Q2 announcement on 15 April 2021.

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. The impact is estimated to be around EUR 650 million (approximately Rs 5500 crore) after taxes and transaction costs associated with the divestment.

The divestment covers business operations with asset transfers in more than 30 countries, including the transfer of 5 separate corporate entities and around 600 employees. Consistent with the transaction agreement, Chr Hansen undertakes to offer various transition services for up to two years to Natural Colors/EQT to ensure continuity of Natural Color business activities. The costs associated with Chr Hansen's 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.

Chr Hansen is a global, differentiated bioscience company that develops natural ingredient solutions for the food, nutritional, pharmaceutical, and agricultural industries. Chr Hansen is uniquely positioned to drive positive change through microbial solutions. The company has worked for over 145 years to enable sustainable agriculture, cleaner labels, and healthier living for more people worldwide. Its microbial and fermentation technology platforms, including its broad and relevant collection of around 40,000 microbial strains, said to have game-changing potential. Matching customer needs and global trends, the company continues to unlock good bacteria's power to respond to global challenges such as food waste, global health, and the overuse of antibiotics and pesticides. As the world's most sustainable biotech company, Chr Hansen touches the lives of more than 1 billion people every day.

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