Biotech arm of Li Ka-shing's flagship pays $1.2b for 80pc of largest nutrition product maker in US CK Life Sciences International (Holdings) yesterday announced it would pay $1.29 billion for an 80 per cent stake in United States-based nutritional supplement maker Vitaquest International Holdings. It is the largest acquisition by the biotechnology arm of Li Ka-shing's Cheung Kong (Holdings) since the company listed in 2002. CK Life Sciences will pay for the deal with cash and loans. The company had about $1.8 billion in cash for the nine months to September last year. According to unaudited figures provided by Vitaquest, the company had revenue of $1.1 billion for the year ended December while earnings before interest, tax, depreciation and amortisation (ebitda) stood at $239 million. 'The transaction is valued at 10 to 11 times of ebitda,' said CK Life Sciences president and chief executive Kam Hing-lam. However, Vitaquest recorded a net loss of $40 million for last year after making a profit of $168 million the previous year. Vitaquest also incurred a net interest expense of $79 million on a bank debt of $1.1 billion which was used to finance part of the recapitalisation in March last year. CK Life Sciences will assume the $1.1 billion debt. The deal needs to be approved by CK Life's shareholders at a special general meeting. After the transaction is completed Vitaquest will become the main revenue stream of CK Life Sciences. 'The transaction offers synergies to our existing businesses and boosts our product portfolio,' Mr Kam said. Vitaquest is the largest contract nutraceutical manufacturer in the United States and a leading marketer of branded nutritional products with more than 800 products in the US market. 'The company's well-established sales and marketing network should benefit CK Life Sciences' existing products such as its self developed Vitagain,' said Mr Kam. Vitaquest has more than 400 contract customers in 35 countries. 'The average growth rate in turnover and bottom line is 12 per cent and 18 per cent respectively in the last two years. We expect Vitaquest will perform well in the future by exploring new market opportunities outside the United States,' said Alan Yu, CK Life's chief operating officer. Mr Yu said the company would consolidate the operation of Vitaquest and Sante Naturelle, its Canadian operation, to reach the economy of scale. CK Life will continue its acquisition strategy and continue to explore further investment opportunities in Europe, Asia and North America, said Mr Kam. Vitaquest chief executive Keith Frankel will remain in his position after the deal. 'This partnership with CK Life Sciences is going to enable us to deliver additional distribution opportunities,' he said. The Frankel family, original founders of Vitaquest, will continue to hold a 20 per cent stake.