The deal creates a major player in the contract manufacturing and ingredient supply space with an expected annual revenue approaching $500 million. Hawkins has a long history of chemical manufacturing expertise which is expected to provide a synergistic benefit to Stauber’s existing operations, and has the capital to invest further into the combined company, said Hawkins’ CEO Patrick Hawkins.
“This acquisition marks the largest in Hawkins' history, and it is transformational for us. We previously stated our intent to expand our portfolio of value-added specialty products within new markets. This acquisition accelerates that strategy,” Hawkins said.
Hawkins said his company is familiar with Stauber’s distribution model and its product list helps expand Hawkins’ existing customer base. Hawkins, founded in 1938, is a multifaceted chemical manufacturer and distributor, with a particular emphasis in recent years on chemicals for water treatment.
Hawkins’ acquisition of Stauber is the latest step in a trend that has seen investment capital enter the dietary ingredient manufacturing space attracted in large part to its reliable growth potential. Stauber offers a long list of ingredients including amino acids, botanicals, carotenoids and specific weight loss formulations. Stauber was also attractive because of its manufacturing capability, which it brought on board via an acquisition of contract manufacturer Pharmline in 2012, which was one of the more important deals of that year, according to financing tracking firm Nutrition Capital Network.
The capital for that step came through a previous entry on Stauber’s acquisition dance card, when in 2011 ICV Partners, a New York-based private equity firm took a majority ownership position in Stauber. At the time of that deal Stauber’s clients included Tomita, Konoshima, FMC, DSM, Brewster, General Chemical and Jungbunzlauer.
Founded in 1969, Stauber offers specialty products and ingredients to the nutritional, food, pharmaceutical, cosmetic and pet care industries with approximately 160 employees, and facilities in California and New York. Stauber generated revenues of approximately $117 million for the twelve months ended September 30, 2015. The combined companies will have approximately 630 employees and revenues of nearly $500 million for the twelve months ended September 30, 2015.
According to Hawkins, key highlights of the deal include:
- The acquisition is expected to be accretive to Hawkins' earnings per share in year one post-transaction, with margins comparable to Hawkins
- Stauber has consistently generated strong cash flows from operations and has had relatively low annual capital expenditure requirements
- Stauber provides a broad business portfolio with extensive and diversified products for the food/dietary supplement market
- Stauber has become a highly-trusted, innovative ingredients supply chain partner to a fragmented universe of domestic and international raw material suppliers and downstream manufacturers and marketers
- Stauber's dry processing and blending capabilities complement Hawkins' liquid blending business and, when combined with a broad range of value-added services, provide total solutions to a wide breadth of long-term, brand name customers
- Similar to Hawkins, Stauber excels at its distribution and sourcing core competencies and has developed long-term, loyal customer and supplier relationships