According to terms of the merger agreement, Innophos will acquire all of the outstanding shares of Novel Ingredients, a New Jersey-based ingredient manufacturer primarily owned by private equity firm GenNx360 Capital Partners, payable in cash.
Novel Ingredients executives, including CEO Rick Antonoff, is expected to remain on board and “will become an integral part of the future of our company,” Kim Ann Mink, chairman, president, and chief executive officer of Innophos Holdings told NutraIngredients-USA.
Closing, subject to customary closing conditions, is slated for completion in the third quarter of 2017, and expected to be accretive to Innophos’ earnings per share in the first year following the close of the transaction.
Increased share of company’s Food, Health, and Nutrition platform
Traditionally a producer of phosphate products for food, pharmaceutical, and industrial market segments, the acquisition of Novel Ingredients aligns with the company’s Vision 2022 strategy, unveiled in April this year during the company’s Investor Day, to grow its food, health, and nutrition portfolio, according to Mink.
The company’s leaders have expressed their plans for more acquisitions in the human nutrition space in August 2016 during Innophos’ second quarter earnings call.
By acquiring Novel Ingredients’ line of branded products and formulation capabilities, Innophos estimated its Food, Health, and Nutrition platform will bump up to $500 million, representing 60% of the total combined company, said Mink. Before Novel Ingredients’ contribution, the segment made up approximately 54% of Innophos’ estimated 2017 revenue.
Expanding in the food and nutrition space is a way the company believes it will drive sustainable and profitable growth, Mink said.
“The reality is that the markets that we have traditionally served with our phosphate portfolio, including many industrial markets, continue to face challenging market environments and are expected to grow at GDP at best,” she said.
The acquisition of Novel Ingredients will “more deeply [align] the company with consumer mega trends like energized aging, health and wellness and clean labels,” she added.