- Offer pitched at 16.1% premium
- Treatt faces stiff headwinds
- Enlarged entity to compete ‘more effectively’
Hard-pressed extracts-to-ingredients supplier Treatt (TET) has thrown in the towel and recommended a £156.6 million takeover by private equity-backed Natara after disappointing the market with profit warnings in a tough 2025-to-date.
While shares in Treatt sweetened up 17% to 262.2p on the news, the 260p offer price is likely to leave a sour taste with long-term shareholders in the Suffolk-headquartered supplier of natural ingredients for the beverage, flavour and fragrance industries, since the stock traded as high as £12.85 at the height of the pandemic.
The takeout price represents a 16.1% premium to Treatt’s undisturbed share price, and an 18.4% premium to the one-month volume-weighted average price of 219.7p, which Treatt bulls will argue looks grudging given the company’s long-run growth potential.
COMPLEMENTARY PORTFOLIOS
Treatt’s board has recommended the £156.6 million cash offer from Natara, a global maker of aroma ingredients controlled by Exponent Private Equity whose products are key inputs to the global F&F (flavour and fragrance) industry.
Natara and its majority shareholder said the acquisition would yield cost synergies and bring together ‘complementary product portfolios’ which will enable the enlarged company to ‘better serve global customers and compete more effectively across key markets’.
Suitor Natara said it had been following Treatt for some time and ‘long admired the business and its strong heritage. Natara recognises Treatt’s 139-year history, distinctive extraction and distillation capabilities and its longstanding customer relationships, including with leading global F&F houses and fast-moving consumer goods companies’.
INFLECTION POINT
The acquisition comes at a time when Treatt faces stiff headwinds ranging from intense competition and input cost inflation to a weaker US dollar, softening consumer confidence in North America and high citrus prices which have weighed on customer demand.
In its most recent trading update (24 July), Treatt downgraded its year-to-September 2025 sales and pre-tax profit guidance to between £130 million and £135 million and £9 million to £11 million respectively.
Natara believes Treatt is at a ‘critical inflection point. 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.’
Vijay Thakrar, chair of Treatt, conceded that while the board had a clear strategy to capture the growth opportunities ahead, 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.’
The board believes the proposed offer from Exponent and Natara is ‘fair and reasonable, and an opportunity for Treatt’s shareholders to realise their entire investment with certain value in cash.’
