Recent years have seen some very big deals in the dietary supplement segment, with the “deal of the century” being the acquisition of NBTY by The Carlyle Group for a pocket-bulging $3.8 billion in 2010.
This has been followed by other deals like Pfizer’s acquisition of Alacer Corp. for an estimated $350 million, DSM snapping up Martek for $1.02 billion, Glanbia’s $144 million acquisition of BSN, and most recently, Proctor and Gamble’s (P&G) acquisition of New Chapter for an undisclosed sum.
Good ideas not enough
NCN’s Steve Allen told NutraIngredients-USA that M&A activity will continue but the buyers, whether they are private equity or corporations, are not willing to take a chance of good ideas any more. “It has to be a profitable asset,” he said.
“I am aware of several ‘strategics’ who are actively shopping for companies [in the dietary supplements space], because they have seen a competitor snap up an offering and they do not want to be left behind.”
“If Pfizer or P&G are really committed to this space, alongside the likes of Bayer, and they want to establish a clear dominant position, then the question is ‘what else is available?’” said Allen.
“Eventually NBTY will come back onto the market, and that would give anyone a huge advantage.”
For the wider nutrition, health & wellness segment, the average investment size rose to $10 million in 2011, up from $8 million in 2010, according to NCN data.
“Growth rates in the natural and organic food, dietary supplement, and other nutrition and health & wellness categories are making small and medium size companies attractive to larger companies, many of which are experiencing stunted growth in their traditional markets,” said Grant Ferrier, an NCN principal and cofounder.
“These large strategic investors view the expanding consumer focus on health and wellness – coupled with the growing penetration rates of many of these newer product segments – as great growth opportunities.”
NCN notes that a deep pool of un-invested funds among venture capital and private equity firms, large corporations, and angel investors bodes well for companies seeking financing in 2012.
Nutrition Capital Network was created in 2007 and connects investors with entrepreneurs and growth companies.