Industry Mergers, Acquisitions Telling of Potential Interests, Opportunities

In recent months, several mergers and acquisitions have been announced in the natural products space, indicating potential areas of interest, growth and innovation in the industry.

In August, Aker BioMarine announced its acquisition of krill inventory and intellectual property (IP) of Neptune Technologies & Bioresources for US$34 million. Neptune's customers and products, including Neptune's popular NKO™ brand, will be integrated into Aker BioMarine’s customer base, said Matts Johansen, CEO of Aker BioMarine, in a statement.

The acquisition represents an exciting venture for Aker, and Neptune’s future endeavors highlight areas of interest and potential for innovation within the natural products industry. Interestingly, Neptune’s plans include focusing on cannabis oil extraction, and its Sherbrooke, Quebec facility (formerly a krill oil facility) will run a special medical cannabis project in the immediate future. According to terms of the acquisition, some of the proceeds will be allocated to the Green Valley medical cannabis oil extraction project.

Neptune will stay in the krill oil business, the company reported, but will focus its efforts on its prescription drugs business (Acasti Pharma Inc.) and softgel capsules via tis solutions business. Neptune is also looking to acquire more strategic businesses, Jim Hamilton, president and CEO of Neptune, said in the statement. Potential acquisitions will be specialty ingredients, brands and the solutions business.

Recent acquisitions by Captek Softgel, Lonza and Innophos Holdings, Inc. reflect the desire of suppliers and contract manufacturers to expand offerings and add additional value to their customers.

Captek’s acquisition of J+D Labs Pharma Manufacturing Inc., announced in August, is intended to provide “a greater diversity of offerings and services within the supplement channel," said Captek CEO David Wood, in a press release.

Lonza’s acquisition of Capsugel, completed in July, supports the company’s strategy to deliver value to healthcare interests by opening new market opportunities. Similar to Neptune’s interest in the pharmaceutical business, Lonza cited pharma as one area of interest supported by the acquisition, along with opportunities in health care and nutrition industries. The transaction carried a $5.5 billion price tag, including refinancing of existing Capsugel debt of approximately $2 billion.

In August, Innophos announced plans to acquire Novel Ingredients, a New Jersey-based contract manufacturer and supplier of botanicals, proteins, amino acids and other ingredients, as well as branded ingredients. Kim Ann Mink, Ph.D., chairman, president and CEO of Innophos, said the acquisition will more closely align Innophos with “important consumer mega-trends such as health and wellness, energized aging and clean labels" in addition to supporting its strategic priorities for growth. Under the terms of the agreement, Innophos will acquire all outstanding shares of Novel Ingredients for a total purchase price of $125 million.

In the case of Lycored, its decision to sell its premix business to Prinova, completed in June, was to narrow its focus on core areas of its business—carotenoids for food and health, tomato-based products and micro-encapsulated ingredients. “By focusing on our core technologies and our fully vertically integrated business, we will be able to enhance our offering and maintain our dedication to customers," said Rony Patishi-Chillim, CEO of Lycored, in a press release.

Looking to manufacturers, KKR announced in July its plans to acquire majority control of The Nature’s Bounty Co. from The Carlyle Group for an undisclosed amount. The sale is the second and final move by Carlyle to sell its Nature’s Bounty business; the global asset manager recently sold the retail portion of the Nature’s Bounty business, UK-based Holland & Barrett retail chain, to L1 Retail. KKR purchased Nature’s Bounty’s consumer product group (CPG), which includes its well-established Nature’s Bounty brand and brands such as Sundown Naturals, Solgar, Osteo Bi-Flex, MET-Rx, Pure Protein and others.

Carlyle will retain a significant stake in the global manufacturer, and, according to Elliot Wagner, managing director of The Carlyle Group, is “pleased to remain part of its future." Wagner’s remarks, as stated in a press release, added, “We've supported significant investments in new management talent and functional capabilities, strengthened the branded portfolio and optimized the operations, creating a strong foundation for future growth."

Health and wellness will continue to be a priority for increasingly health-conscious consumers. As such, contract manufacturers, product developers and ingredient suppliers will make moves to support the needs of the market. In recent months, mergers and acquisitions show businesses are seizing new opportunities (as seen in Neptune’s move toward cannabis), increasing interest in pharma solutions (as seen in strategic goals of Lonza and Neptune), increasing focus on specialty solutions (as seen in recent moves by Lycored and AkerBiomarine) and providing a wider array of solutions to customers (as seen by Innophos, Captek Softgel and others).

Looking for more information on the specific industry challenges nutraceutical brands face? Join us for Navigating the Business of the Nutraceutical Industry on Sept. 26, at SupplySide West 2017.