(Alliance News) - Stevia sweetener producer PureCircle Ltd on Thursday said it has agreed a GBP185.3 million takeover offer from US-based food ingredients maker Ingredion Inc.
Shares in PureCircle are currently suspended due to delay in the publication of its results for the year ended June 30, 2019. The company, however, published its financial 2019 numbers at the end of March. The stock last closed at 131.20 pence each as per London Stock Exchange website.
Under the terms of the acquisition, PureCircle shareholders will receive 100 pence in cash for each PureCircle share or will be able to receive shares in SRSS Holdings Ltd, a UK company formed by Westchester, Illinois-based starch producer Ingredion.
PureCircle investors opting for the share alternative will get one SRSS share for each PureCircle share held.
SRSS will also provide USD130 million funding to PureCircle to repay outstanding debt.
Following the completion of the deal, Ingredion will own 75% of SRSS, while minority PurcCircle shareholders electing for the share alternative will own 25%.
SRSS has received irrevocable undertakings to vote in favour of the acquisition from shareholders and directors owning around 68% of PureCircle's outstanding share capital.
PureCircle separately on Thursday reported a narrowed loss for the first half of financial 2020 and said revenue will be depressed across all regions as a result of the Covid-19 outbreak.
For the six months to December 31, the company recorded a pretax loss of USD13.3 million compared with a pretax loss of USD32.1 million a year ago. The narrowed loss was partly due fall in cost of sales and lower net foreign exchange losses and other operating expenses.
First-half revenue declined 6.0% to USD46.8 million in part due to discontinuation of a distribution agreement. These were partly offset with the sales from breakthrough products and blends.
PureCircle said revenue for the first two months of second-half - January and February - totalled USD17.0 million. It, however, noted that performance to the end of February was unexpectedly "sluggish," with overall sales decline of 4.6% versus the comparative period.
"We expect the business to generate positive cash flows, however, we may face difficulty in sustaining profit margins in the short term. There is also a risk, particularly in relation to Covid-19, that the group may not have sufficient liquidity up until the bank facility is required to be repaid in November 2020," the company said.
"Given the level of uncertainty in our markets and economic uncertainties arising from the Covid-19 pandemic, the outlook for the full year is now more cautious than before," it added.
By Tapan Panchal; tapanpanchal@alliancenews.com
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