Naturex buys Natraceutical to form botanicals giant
The deal makes Naturex, “the world’s biggest botanical extracts supplier ” according tothe French company’s president and chief executive officer, Jacques Dikansky, and continues the company’s aggressive acquisition policy that has included Pure World in the US and the ingredients division of fellow French supplier, Berkem.
Under the deal between the two publicly-traded companies, Natraceutical gains between 38-40 per cent of Naturex’s stock and leaves it to focus on its food supplement business through its pharmacy brand, Forte Pharma.
The new entity will have an annual turnover in the vicinity of €200m – about twice Naturex’s 2008 turnover of €93.2m. In the first half of 2009 its revenue was €54.4m.
Natraceutical investor relations and communications director, Gloria Folch, told NutraIngredients.com its specialisation in health, beauty and weight management in the food sector provided an ideal fit with Naturex’s activities.
Euro strength
Naturex, which has about 90 per cent of its business outside of France, and 60 per cent in the US, said Natraceutical’s strength in the European food ingredients market and its broad portfolio of functional ingredients as well as flavourants and texturants, made it especially appealing.
“Natraceutical have a huge presence in Europe which we can benefit from and their broad range will boost our offerings globally,” Dikansky said. “They are very strong in natural colours and we have never been very strong in natural colours for instance. Their functional ingredients range of beta-glucans, caffeine, yeast, soluble fibres and more are all great complements to our range.”
Natraceutical’s fruit and vegetable powders range, along with pectin, offer completely new areas of operation for Naturex.
The new entity has 60 per cent of its business in food and beverages; 30 per cent in food supplements and 10 per cent in pharma and cosmeceuticals, Dikansky said. Of that, 45 per cent is in Europe; 35 per cent in North Amrica and 20 per cent in Asia, latin America and Africa.
The new entity's headquarters will be established within two years under one roof at Naturex’s current Avignon headquarters in southern France.
Size matters
“We are now 30 or 40 per cent bigger than the next largest natural extracts supplier,” Dikansky told NutraIngredients.com this morning. ”This is important because you need to be bigger and bigger to meet clients’ increased needs. Customers are demanding more when it comes to research and development, clinical data, quality control, sales presence and you need to be large to deliver on this.”
He said while the merger was a significant one, it did not necessarily signal the end of acquisition activity.
“Whether it is through organic growth or acquisition, Naturex will never stop growing,” he said. "But we may have to wait a little while before we take any further action as this deal is such a large one.”
He emphasised that while Natraceutical now had a 40 per cent stake in Naturex, the two companies would operate completely independently, and there would be no exclusivity arrangement between the two in terms Naturex supplying ingredients for the Forte Pharma brand.
Some of the 18-year-old company’s bigger deals include the incorporation of Pure World in 2005 and the ingredients division of Berkem in 2008, as well as smaller European and American acquisitions in between.
The share issue is expected to be approved by existing Naturex shareholders at an impending meeting. The terms of the deal mean that while Natraceutical will become the largest single Naturex shareholder, it will take only two of six seats on the board, with Dikansky’s family-owned holding company, SGD, taking three and remaining the reference shareholder of the company. There is also an independent board member.
Natraceutical's stake will be adjusted between 38 and 40 per cent in a due diligence process over the next two months. The deal must also be approved by the French financial market authority.
Natraceutical Group chairman, Xavier Adserà, said of the deal: “Under the current financial circumstances that are requiring companies to adapt their growth strategies to the new environment, we believe that uniting our strengths to Naturex’s will be highly value-creating for our businesses and shareholders."
The above article has been amended from the original, which initially stated that the whole company will be moved to Avignon within two years. In fact, following clarification from Naturex, it is the company's headquarters that will be in Avignon.
