Martek to Sell Manufacturing Site Assets to Alltech

COLUMBIA, MDMartek Biosciences Corporation, a manufacturer of microbial omega-3 fatty acids for the for use in infant formula, pregnancy and nursing products, foods and beverages, and dietary supplements announced that it has entered into an agreement to sell a significant portion of its Winchester, KY, manufacturing site assets to Alltech, Nicholasville, KY, an animal-health company.

The assets to be sold include a majority of the land and buildings at the Winchester site as well as certain equipment, including all of the production-scale fermentation and recovery equipment. The company says this transaction does not include the sale of, license of, or granting of any rights to any of Marteks strains, patents or any other technologies. It also does not permit the use of the Winchester assets to produce omega-3 and/or omega-6 polyunsaturated fatty acids for human use for 10 years.

Alltech will pay Martek a total of approximately $14 million over the next four years for the assets to be acquired. The transaction is expected to close by November 30, 2010, subject to customary closing conditions.

Following the sale and restructuring, Martek plans to continue to maintain a strong presence in Winchester, with approximately 50 employees focused primarily on lab and pilot scale development, limited production, and supply-chain management. The company will also maintain necessary production redundancies through continuing access to certain key processes at the Winchester facility and arrangements with contract manufacturers.

The restructuring of our manufacturing operations and this related asset sale is a necessary part of our strategy to significantly offset price reductions resulting from our infant-formula contract extensions through the implementation of manufacturing cost savings, product innovation initiatives, and growing our non-infant-formula business, says Steve Dubin, Marteks CEO. Importantly, Martek will continue to have access to back-up production facilities, if needed. This transaction will also enable Martek to maintain a considerable presence in Winchester where we will carry out a variety of critical innovation, development, and other activities.