Treatt

Natara Global has increased its offer for the takeover of ingredients specialist Treatt.

The producer of aroma ingredients, which is owned by PE firm Exponent, bumped its price by 11.5% from 260p to 290p, valuing Treatt at £173.9m.

The new offer represents a 29.5% premium to Treatt’s closing share price back in September before the bid from Natara became public.

“The increased cash offer follows constructive engagement with Treatt’s board and major shareholders, and underscores Natara’s belief that the increased offer represents full and fair value for Treatt while delivering speed and certainty in an uncertain market environment,” said a statement on the London Stock Exchange this morning.

Natara added the increased offer was final and would not rise any further.

Treatt said the increased offer was “fair and reasonable” and intended to recommend the deal unanimously to its shareholders.

Shares in Treatt jumped by 4% to 284p as markets opened today.

In early September, when the deal was originally announced, Natara said the combined entity would be able to make the most of Treatt’s “state-of-the-art facilities” to capitalise on opportunities that each company could not address alone.

Natara’s new offer follows German ingredients group Döhler building a bigger stake in Treatt late last month from just less than 3% to 10%.

“Döhler views Treatt as a high-quality company and recognises its strong position in the natural extracts and flavours market,” the company said at the time.

“Döhler is supportive of the strategy outlined by Treatt and looks forward to building a constructive dialogue with the Döhler executive management team. Döhler intends to hold its shares in Treatt for investment purposes.”

Döhler confirmed it was not considering an offer for Treatt.

AJ Bell investment director Russ Mould said at the time, when the Döhler move was revealed, that “there are some strange goings-on in the ingredients sector”.

“Three weeks after Treatt agreed a takeover offer from sector peer Natara, another industry player has muddied the water,” Mould added. “Döhler has increased its stake from c3% to 10% of Treatt. Normally, such a situation would be a precursor to making a counterbid, yet Döhler says it is not considering a takeover offer. Instead, Döhler sees the stake as an investment.

“If Natara’s bid is successful, Döhler will be bought out with a cash payment. That makes the latest stake-building suspicious. Döhler might be taking a bet that Natara’s bid isn’t enough to win over shareholders and that securing a 10% stake puts it in prime position to work closely with Treatt should it remain independent.”