A £232 million buy-out of a South Korean beauty product ingredients business has been agreed by Croda International.
The FTSE-listed smart science specialist will take on Solus Biotech, a leading supplier of naturally derived powder ceramides, a high-growth international market. It is a deal that is described as giving Croda greater ability to serve luxury beauty customers in Asia and globally.
The number of products featuring ceramides - moisture-loss preventing waxy lipid molecules - has doubled over the past five years, and they are used principally for skin care but increasingly for hair care formulations.
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Croda said the deal will significantly strengthen its Beauty Actives portfolio and "increases its exposure to targeted prestige segments". The debt-free cash-free deal will also expand the globally-operating East Yorkshire headquartered firm’s manufacturing capability in Asia, while creating a new biotechnology research and development hub in the region.
Steve Foots, chief executive of Croda, said: "This is a strategic bullseye for Croda, consolidating our position as a global leader in supplying sustainable, natural actives for personal care across three critical technology platforms of peptides, ceramides and retinol. It significantly enhances our sustainable biotechnology capabilities and adds a North Asia manufacturing and innovation facility, providing a springboard to premium markets in Asia and beyond. I am especially excited about their brilliant technology, with Solus bringing rich intellectual property and proprietary know-how that we will be able to deliver to customers globally."
Solus has more than 30 years' experience in biotechnology and fermentation. The business generated sales worth £28 million last year, and employs 95 people across both its R&D centre in Bundag, near Seoul, and its production centre in Iksan.
Access to Croda's formulation capabilities are also seen as a way to accelerate development of Solus' products, creating “even greater value for our customers globally and address exciting, formulated ceramide demand”.
Solus also brings a portfolio of phospholipids, spanning pharmaceutical applications and beauty care. These naturally-derived phospholipids are produced at a plant and can be used as delivery systems for pharmaceutical actives and cosmetics. Croda won significant work in the Covid -19 vaccine roll-out with its lipid delivery system for the active ingredient. It has since committed to major expansion in the UK and US.
Mr Foots said: “This will strengthen our pharma presence in Asia and enable collaborative R&D with Croda's Avanti business for the supply of lipid systems for drug delivery. In addition, Solus is developing biotech-derived retinol, which is an exciting, sustainable alternative to synthetically derived retinol.”
The acquisition is subject to regulatory approval, and is the first major addition for the £1.9 billion turnover business following the £667 million disposal of its industrial division to Cargill, which included the large Hull site. The Cowick Hall team is expected to present the 2022 results later this month, having delivered a record first half performance.
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