Vitaquest majority stake sold to Hong Kong group
market, with the acquitisition of a majority stake in Vitaquest.
The Hong Kong-based group has entered into an agreement to purchase an 80 percent stake in Vitaquest for $166 million from MidOcean Partners, which itself only acquired the stake in March 2005.
With turnover in the year ended December 31 2005 of $142.8 million, Vitaquest is said to be the country's biggest custom and contract nutraceutical manufacturer, and a leader in the manufacture and marketing of branded nutritional products.
However it also reported net losses after tax of $5.2 million, which were attributed to recapitalization expenses, non-business-related expenses, start-up costs and no-recurring compensation.
Satisfied that these factors will cease to be a problem after completion of the transaction, CK Life Sciences has said it is "poised to benefit from the strong sales and profit contrinution from Vitaquest".
MidOcean led Vitaquest through recapitalization last year. MidOcean managing director Rob Sharp said: "Vitaquest has a wonderful business model and a leading market position in the growing nutraceutical market. During our partnership with Vitaquest's management team led by CEO Keith Frankel, Vitaquest was positioned to become adominant global player in this space. We are proud of what Vitaquest has accomplished and believe that Vitaquest and its customers will benefit from its new and exciting partnership with CK Life Sciences and its affiliatedcompanies."
The acquisition, CK Life Sciences' first in the US, is funded through internal resources and borrowings.
CK judged the company to be a good fit with its existing operations. As well as boosting its product portfolio, it is expected to help enhance product formulations, improve its R&D and manufacturing capabilities and broaden its sales and distribution.
The US is particularly attractive for CK, since its nutraceuticals market is the largest in the world, estimated to be worth around $19 billion in 2004.
"Not only will Vitaquest bolster our operations in North America, it will form a powerful springboard for the group and speed up our global development," said president and CEO Mr HL Lam.
CK Life Science is currently involved in discussions about other opportunities in North America, Europe, Australia and Asia, some of which it says are at a "relatively mature stage".
In 2005 the group acquired Canada's Sante Naturelle for CN$53.95, and made two Australian agriculture acquistions, Anvirogreen adn Nuturf Australia.
Listed company on the Growth Enterprise Market of the Hong Kong Stock Exchange, CK Life Sciences (Holdings) had a market capitalization of about HK$7.9 billion as at the end of 2004.
The Frankel family, which founded the company more than 20 years ago, will retain a 20 percent stake in Vitaquest and Keith Frankel will stay on as CEO.
