‘A new and exciting chapter’: Chr. Hansen sells Natural Colors for €800m

By Flora Southey

- Last updated on GMT

The Natural Colors portfolio includes an alternative to carmine made from sweet potato / Image source: Chr. Hansen
The Natural Colors portfolio includes an alternative to carmine made from sweet potato / Image source: Chr. Hansen

Related tags Chr hansen Natural colors

Just weeks after announcing a strategic review of its Natural Colors Division, Chr. Hansen has found a buyer in Swedish private equity firm EQT.

Chr. Hansen and EQT have agreed on a purchase price of €800m for the division, which develops and manufactures natural colouring ingredients for food and beverages.

Executive Vice President of Natural Colors Division, Klaus Bjerrum, said he is ‘very pleased’ to announce EQT as the new owner. “EQT has acquired our great business (pending closing) to grow it organically and inorganically based on our capabilities and organisation, and not least our leading market position.

“It is my conviction that this marks a new and exciting chapter for us, and I am excited to embark on this journey with EQT and all our talented employees around the world.”

Reviewing ‘the largest pigment portfolio in the industry’

According to Chr. Hansen, Natural Colors boasts the ‘largest pigment portfolio in the industry’​. Its 600-plus products are made with fruit and vegetable concentrates from carrots, beetroots, spirulina, grape skin, and sweet potatoes.

Earlier this month, Chr. Hansen launched a new spirulina-based blue / Image source: Chr. Hansen

Last year, the division commercialised a new natural colour product, made from the Hansen sweet potato Ipomoea batatas​, to serve as an alternative to carmine – traditionally made from crushed cochineal insects.

And earlier this month, the Danish ingredients supplier launched two new products for food and beverage applications: a turmeric-based yellow and a spirulina blue​.

Despite being a ‘global market leader for natural colours’ and offering ‘an attractive return profile’ (the division has grown organically by around 9% per annum the past five years and generated sales of €224m in 2018/19), Chr. Hansen announced plans to undertake a strategic review of the division late last month.

Under its newly launched 2025 Strategy​, the Danish company said it plans to increase focus on its microbial and fermentation technology programmes, rather than its non-microbial assets.

Which is why, in an interview with FoodNavigator at the time of the Strategy launch, CEO Mauricio Graber voiced concerns that Chr. Hansen may not be the ‘right owner’ for the business.

A natural deal

Chr. Hansen expected the strategic review to be completed ‘within the next few months’. Yet just one month on, the review has officially concluded.

“The divestment of the Natural Colors Division completes the Review part of our recently launched 2025 Strategy,” ​said Graber. “Chr. Hansen can now focus on fulfilling the ambition of becoming a pure-play, microbial and fermentation company with industry leading, profitable growth.”

From H1 2021, EQT will be the owner of Chr. Hansen's Natural Colors Division, which includes a recently launched turmeric yellow / Image source: Chr. Hansen

During the process, it became clear that EQT ‘showed the strongest conviction’ in the potential of the business, Graber added, “and the highest dedication to the future development of it”.

While not technically a done deal, with the transaction expected to close in H1 2021, EQT is preparing to make its mark on the business.

The private equity firm will take ownership of the Natural Colors site, located in Hørsholm, Denmark, and onboard the division’s 650 employees.

Concerning market growth, EQT intends to build on ‘continued organic growth’ within current markets, ‘with a focus on US and Asia’, and says it will investigate M&A opportunities to consolidate a ‘highly fragmented foods colouring market’.

EQT wants to invest ‘significantly’ in the division’s organisation and ‘strengthen its infrastructure, sustainability capabilities and supply chain setup’. “Natural Colors is expected to leverage EQT’s inhouse expertise within digitalisation and sustainability, and EQT’s global advisory network, which possesses significant experience from development strong ingredient companies,” ​the private equity firm noted.

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