Swander Pace Capital, a leading private equity firm specializing in investments in consumer product companies, announced the acquisition yesterday. Terms were not disclosed.
Swanson based in Fargo, North Dakota, carries more than 27,000 health and wellness products sold under its own and third-party brands, including vitamins, minerals, supplements, sports nutrition, natural food, and beauty products. The family-founded business reaches consumers through its significant e-commerce operations as well as its catalog. In addition to its North American base, Swanson services consumers globally through online operations and distributors in 51 countries.
“Swanson has established itself as the leader in online and catalog marketing of healthy living products,” said Corby Reese, a managing director at Swander Pace Capital. “The company is extremely well-positioned to take advantage of trends in healthy living, natural and organic lifestyles, and a more active, aging population. We look forward to partnering with the Swanson team to accelerate the company’s growth.”
For industry observer Scott Steinford, president of both the Natural Algae Astaxanthin Association (NAXA) and the CoQ10 Association, said it’s an indication that the supplement industry continues to be a hot investment target.
“There are a lot of indications that even though we’ve been subject to a lot of negative publicity over the past year that there is still a very active market in this regard,” Steinford told NutraIngredients-USA.
Started in 1969 by Leland Swanson, Swanson has grown from a small family-run business to a worldwide leader in natural health products with more than 650 employees across three facilities in the United States.
“Swanson has a deep understanding of what health-conscious consumers want and offers a broad assortment of relevant, high-quality products which are delivered seamlessly and supported by excellent customer service,” said Heather Smith Thorne, director at Swander Pace Capital.
Positioned for continued growth
Steinford said Swanson, which started as a catalogue seller, is well positioned for continued growth as more and more supplement purchases move online. And the management team will remain largely intact during the acquisition.
“This is not unexpected. This move has been foreseen for several years. this is not unexpected, it has been theorized for several years. They have been one of the top three or four online retailers as it is and I think they are going to continue to be a strong presence. The individuals who are going to lead the company going forward will continue to follow in the footsteps that Lee provided,” he said.
Swanson CEO Ken Harris is reported as having said in 2014 that Swanson Health Products was the largest privately held supplier of vitamins and supplements. He stated the company shipped its products to more than 150 countries, had more than $300 million in annual sales, and was growing at a rate of 10% a year.
This is the second large acquisition for Swander Pace in the dietary supplement realm in recent months. In December 2015 the company acquired contract manufacturer Captek, which specializes in softgels and is reported to service more than 200 brands selling in 20 countries. Captek was previously owned by another private equity firms, Prairie Capital and Skyline Global Partners. Swander Pace now has three nutraceutical companies in its portfolio: Swanson, Captek and Renew Life Formulas. Renew Life specializes in probiotics and cleansing formulas and also features a wide variety of omega-3 skus. The investment firm previously owned Santa Cruz Nutritionals.