Provexis seeks to demerge Science in Sport and Fruitflow

“…the Board does not believe that the market fully appreciates the value of the Science in Sport Business..."

UK firm Provexis has filed to demerge the Science in Sport (SiS) consumer sports brand it purchased for €10m in June 2011 from its Fruitflow tomato-based ingredients business, as it believes the separation will increase the market value and perception of SiS.

The move, if approved at a General Meeting in two weeks’ time, will see Provexis devote the bulk of resources to SiS and reduce its net assets by an estimated £7.1m (€8.28m).

“…the Board does not believe that the market fully appreciates the value of the Science in Sport Business while it is combined with the Fruitflow Business,” Provexis said in its demerger filing.

“Businesses with similar characteristics and revenue growth to the Science in Sport Business historically command a multiple of sales valuation, something which has not been recognised in the valuation of the Provexis Group since the acquisition of Science in Sport.”

The statement went on: “Furthermore it is the opinion of the Board that the two divisions are less likely to maximise their potential performance if they continue to be operated as part of one group.”

“The Board concluded unanimously that a demerger, in which Provexis Shareholders remain shareholders in both businesses, would be the best way of maximising shareholder value.”

Fruitflow

Provexis said it would retain control of the Fruitflow tomato extract business that has an EU-approved blood circulation improving health claim, and with which it has a partnership with Dutch ingredients giant, Royal DSM.

But it said it would reduce its annual running costs in that business to £250,000 (€290,000 per year), with DSM taking over the bulk of the commercialisation work and Provexis focusing on, “protecting the intellectual property of Fruitflow and assisting DSM with scientific work”.

“The Board believe that these obligations can be met with a very small team comprising two part-time executives, together with two non-executive directors to oversee strategy and governance matters,” Provexis said in a statement.

“All other operational staff currently employed by the Provexis Group will become employees of the Science in Sport Group following completion of the Demerger.”

Provexis recorded a pre-tax loss of £4.6m (€5.37m) for the financial period ended March 2013 on £3.5m (€4.08m) revenue , compared to losses of £4.3m (€5m) in 2012 on revenue of £5.6m (€6.53m).