Amerifit Buy Gives Martek Stock Much-Needed Boost

Martek Biosciences Corporation, a leading supplier of infant formula products in the United States, has agreed to pay $200 million for Connecticut-based Amerifit Brands Inc., a consumer health and wellness company known for its condition-specific supplements. 


The transaction, which is expected to close sometime during Martek’s fiscal second quarter, will bolster Martek’s product line, which features the popular life’sDHA and life’sARA ingredient brands. Amerifit’s key dietary supplement brands include Culturelle, Cardiostat and Estroven, which are aimed at supporting digestive, cardiovascular and women’s health. Amerifit generated revenues of $81 million in 2009, compared to Martek’s $345 million.

As a result of the transaction, Martek adjusted its quarterly earnings projections to a range of $88 million to $90 million, which is up from $85 million to $89 million. “This new capability will enable Martek to move up the value chain by getting closer to the consumer, and should result in increased revenue and gross profit opportunities,” said Martek CEO Steve Dubin.

NBJ Bottom Line 

The move to acquire Amerifit helps Martek diversify its product portfolio—which, though wildly successful, has probably begun to reach a saturation point. Martek’s life’sDHA and life’sARA were present in at least 95% of infant formulas in the United States in 2009, according to Ethan Leonard, Martek’s vice president of pediatric nutrition. Martek said the acquisition will allow the company to utilize the Amerifit brand for new product launches in 2011 and 2012. In addition to the increased consumer reach and product production capacity, Martek will gain peace of mind with investors, who were waiting to see how the company would sustain future growth. After a fledgling three-month performance, Martek’s stock climbed to its highest levels since October 2009 on news of the merger, with shares trading in excess of $22 on January 26, 2010.

Related NBJ Links:
Martek Revenues Down As Customers De-Stock Infant Formula
Martek Partnerships Paying Dividends, Q2 Revenues Increase 2%
CEO Video Interview: Why Does Martek Spend $6 Million Annually on Clinical Research?

Related Functional Ingredients magazine links:
Brainy Ingredients Get Brawny


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