Oterra Acquisition: Key Details, Impact, and What Comes Next

EQT's acquisition of Oterra marks a significant move in the natural coloring ingredients industry. By integrating Oterra, a leader in natural food color solutions, EQT aims to expand its market presence and drive innovation. This strategic acquisition underscores the growing demand for sustainable and plant-based food ingredients, positioning EQT to leverage Oterra's expertise and global reach.

What Is Oterra?

Oterra specializes in natural colors and sustainable food coloring solutions. The company focuses on providing high-quality, plant-based color ingredients for the food industry. Oterra's unique selling points include its strong emphasis on natural and sustainable practices, which set it apart in the market. By promoting a collaborative approach towards natural products, Oterra aims to lead the industry in offering eco-friendly and health-conscious coloring options.

Who Acquired Oterra?

EQT Group is a global investment organization known for its value-driven approach in various sectors, including private capital, infrastructure, real estate, and private wealth. The company invests in high-quality firms, aiding their growth through strategic support. Key services include investments in healthcare, technology, and sustainable real estate solutions. With over 300 portfolio companies worldwide, EQT's thematic investment strategy and active ownership underscore its significant influence and commitment to sustainability and innovation in the industry.

When Was Oterra Acquired?

EQT acquired Oterra in March 2021. This acquisition came at a time when the natural coloring ingredients market was experiencing significant growth. The industry was driven by increasing consumer awareness around health and environmental sustainability, a shift from synthetic to natural ingredients, and a growing demand for plant-based food. Additionally, regulatory pressures were accelerating the transition to natural colors, particularly in the all-natural Coloring Foodstuffs segment.

Why Was Oterra Acquired?

• Market Expansion: The acquisition of Oterra allows EQT to enter new markets, particularly in the United States and Asia. By leveraging Oterra's established presence and facilities, such as those acquired from Food Ingredient Solutions in New Jersey and Missouri, EQT can effectively broaden its market reach and cater to a growing demand for natural colors in these regions.
• Technology Integration: EQT benefits from Oterra's advanced technology and expertise in natural color production. The integration of SECNA's anthocyanins from black carrots and grapes, as well as Diana Foods' USDA and EU organic certified colors, enhances Oterra's product offerings and strengthens its backward integration of key ingredients like red beet.
• Competitive Advantage: The acquisition significantly strengthens EQT's competitive position in the natural colors market. Oterra's best-in-class products, strong R&D capabilities, and sustainable agronomy programs provide a robust platform for EQT to support customers in transitioning to natural colors, thereby solidifying its market leadership and expanding its global footprint.

Acquisition Terms

• Acquisition Price: The acquisition price was €800 million ($934 million).
• Payment Method: The payment method was not publicly disclosed.
• Key Conditions or Agreements:
  • The divestment aligns with Chr. Hansen's 2025 strategy to focus on becoming a pure-play microbial and fermentation company.
  • EQT plans to grow the division in current markets, particularly in the US and Asia, and will explore acquisitions for industry consolidation.
  • EQT will enhance the division's digital infrastructure, sustainability capabilities, and supply chain setup.
  • The transaction was expected to close in the first half of 2021.

Impact on Oterra

The acquisition of Oterra by EQT has led to significant changes in the company's operations and management. EQT has invested heavily in Oterra's digital infrastructure, sustainability capabilities, and supply chain setup. The management team, led by CEO Martin Sonntag and CFO Hubi Windegger, has been instrumental in steering these changes. Additionally, Oterra has expanded its operational footprint with new facilities in the US, France, and the UK, following the acquisitions of Food Ingredient Solutions and Diana Foods. These strategic moves have positioned Oterra to better serve its global customer base and enhance its market presence.

Oterra's product offerings have also seen substantial enhancements. The company now boasts a broader range of natural color ingredients, including USDA and EU organic certified colors from Diana Foods and anthocyanins from SECNA. These additions have strengthened Oterra's backward integration and diversified its portfolio. Employee reactions have been generally positive, with the integration of approximately 80 SECNA employees into Oterra's workforce. Customer reactions have been favorable as well, with Oterra's expanded capabilities and product range meeting the growing demand for natural colors. For founders considering business transitions, tools like Sunset can assist in managing such processes compliantly and efficiently.