MM2 acquires Epic and will target other small companies
manufacturer and distributor of strength and performance supplement
5-Tetra, and expects to snap up a number of other dietary
supplement companies in the next year.
According to the Matawan, New Jersey-based group, there are rich pickings to be had for acquisition-hungry firms in the growing, but fragmented, supplements industry.
Euromonitor International estimated the US retail market for dietary supplements to be worth $6.5 billion in 2004, growth of four percent over 2003. In 2002-3 growth was 2.6 percent, and in 2001-2 just 1.3 percent.
This growth story represents a recovery of the market, which dipped from $6.43 billion in 1999 to $5.99 billion in 2001, corresponding with the general economic downturn.
MM2 CEO Mark Meller said that that there are "hundreds of small companies which have good products but inadequate distribution and/or financing."
"We expect to be in a position to acquire a number of these companies over the next year, and are excited about the prospects of building a very large company."
MM2 is targeting companies that meet certain criteria, which, it believes, signal an opportunity to create value. These are: non-core assets; recurring revenues; loyal customers; an established brand; that provide services and solutions in a fragmented market; and that are strategic complements to its portfolio.
In particular, it is interested in companies that have intellectual property, or other entity that gives it a "defensible market position in its space".
In an ideal scenario, the existing management will remain in place and MM2 will provide capital to enable it to implement its business plan.
As for Epic Nutrition, Jerry Mahoney, chairman of MM2, said: "We are committed to expanding Epic Nutrition, sustaining [its] product development, and assisting Epic in offering an expanded range of services."
The transaction is expected to close this month. The value and other terms and conditions have not been disclosed.
