Iceland Health, which reported sales in the region of $26m in the 12 months ended June 30 2006, has the exclusive US rights to a fish oil and omega-3 oils manufactured through a patented distillation process.
News of the deal signals another new direction for Nutrition 21, which this year has made the transition from ingredients to finished products supplier but has until now occupied itself primarily with chromium picolinate.
Against this backdrop, it appears to make sense that it should make its omega-3 entry at the finished product side. But while Nutrition 21's existing offerings are being sold through retail, Iceland Health products are currently sold through direct response channels including infomercials and ecommerce. The deal could therefore open up new sales channels for each of the product portfolios.
"We… can look forward to taking the Iceland Health franchise into retail," said Nutrition 21 president and CEO Paul Intelkofer. Indeed the company's retail entry strategy has been aggressive, with the Chromax branded aimed at being in 90 percent of food, drug and mass outlets nationwide by the end of the summer.
Intelkofer continued: "In turn, we are excited about further supporting out Chromax chromium picolinate marketing initiatives with TV advertising and other direct marketing."
In May the company expressed its aim of making chromium picolinate as recognizable a mineral for insulin health end-benefit as calcium, is for bone health - no mean ambition since in the US alone calcium accounts for $1bn in retail stand-alone sales.
This year has seen a spate of nutraceutical companies allying themselves with omega-3 interests - such as Cognis' acquisition of Napro Pharma, the agreement between The Wright Group and Puleva Biotech, and Denomega's arrangement with microencapsulation firm GAT.
Nutrition 21 has spent considerable time and resources building the scientific credibility behind chromium piconinate. Since the scientific backing for omega-3's manifold health benefits, including heart health, eye health, joint health and cognitive function, is well-founded, it could prove an ideal nutrient for a science-minded company to embrace.
"The proposed acquisition of Iceland Health would build on our strategy to leverage our biosciences roots and to continue to develop and market proprietary and clinically substantiated nutraceuticals that address significant health care concerns," said Intlekofer.
Iceland Health's price tag is 8m shares of Nutrition 21 common stock, $1m cash, $2.5m in notes due in three years with five percent interest, $2.5m max in earn out payments, and the potential issuance of 1.5m addition common stock shares depending on Nutrition 21's performance.