M&As, financings hit all-time high in 2012

Nutrition Capital Network (NCN), an organization that connects high-potential growth companies in the nutrition and health and wellness industry with investors, saw investments hit an all-time high in 2012, with 247 transactions recorded in categories ranging from food and beverages to dietary supplements, ingredients, fitness, and enabling technologies.

While M&A activity by itself was down 12 percent to 155, 2012 saw over 50 percent growth in financings, to 92, indicating a strong interest among venture capital and other funds in fueling growth for the next generation of nutrition and health and wellness companies.

“These fundamental trends support our mission as a gateway for growth companies to obtain capital and seasoned partners to accelerate their development towards an eventual acquisition and exit,” says Grant Ferrier, NCN CEO and cofounder. “NCN investor meetings offer a great way for companies looking for financing or an exit to present themselves and gain informal access to over 50 premium industry investors in one day,” adds Ferrier.

Among food and beverage company financings in particular, in the course of 2012, four were previous Nutrition Capital Network presenting companies.

Especially notable in 2012 was the unprecedented number of investments in technologies that support nutrition and health and wellness, with 28 financings recorded.

“While most categories saw an uptick, technology-driven ventures saw the greatest increase last year. And we expect this trend to continue as consumers increasingly leverage technology in their wellness efforts,” says Mike Dovbish, NCN executive director.

One example was the digital platform Farmigo, which provides a personalized online marketplace for locally harvested foods. Sherbrooke Capital, an NCN Cornerstone Investor, was among investors providing Farmigo with an $8M financing during the year.

NCN also released its list of Top 15 Transactions in Nutrition and Health & Wellness for 2012, including Campbell Soup’s $1.6B acquisition of Bolthouse Farms, UK’s Reckitt’s $1.4B acquisition of Schiff Nutrition and the $500M and $900M acquisitions of leading fish oil suppliers Ocean Nutrition and Pronova BioPharma by DSM and BASF respectively. The list was compiled based on strategic importance, size or scale, relevance of the players involved and other factors.

Transactions are listed by segment and in no particular order. The complete list reads:

Top 15 Transactions in Nutrition and Health & Wellness 2012

Segment                    Target                                     Acquirer/Investor

Contract Mfg              Cornerstone Research             Sun Capital Partners

Ingredients                  Fortitech                                  DSM

Ingredients                  Ocean Nutrition Canada         DSM

Ingredients                  Pronova BioPharma ASA       BASF

N&O Food                  Bolthouse Farms                     Campbell Soup Co.

N&O Food                  Food Should Taste Good       General Mills

N&O Food                  Popchips                                  Verlinvest

N&O Food                  Udi's                                        Smart Balance

N&O Food                  Zico                                         Coca-Cola

Personal Care              Method                                   Ecover

Retail                           Earth Fare                               Oak Hill Capital Partners

Retail                           Sunflower Natural Markets    Sprouts Farmers Markets

Supplements                Alacer Corp.                            Pfizer

Supplements                New Chapter                           Procter and Gamble

Supplements                Schiff Nutrition International Reckitt Benckiser Group

Source: NCN Transactions Database

“These top deals illustrate the continued attractiveness of the nutrition and health and wellness category to large, well-established players capable of providing large-ticket exits to a select few, highly successful companies,” says Ferrier. “Also, the recent presence of retailers and contract manufacturers on this list are an early indication of maturity in the industry”.

With increased maturity and greater interest among consumers in nutrition and health and wellness offerings come higher demands on brands to provide an all-around compelling brand experience.

“The acquisitions of Method by Ecover and of BluePrint by Hain Celestial in 2012 demonstrate the critical importance of great brand execution, right down to the design of the physical object consumers interact with, to the success of brands in the nutrition and health and wellness categories,” says Marie Benedix, NCN principal.