Mid-market private equity firm HGGC has acquired Utah-based supplement and natural products provider Nutraceutical International Corporation in a deal valued at $446 million.
Shareholders of NASDAQ-listed Nutraceutical, will receive $41.80 in cash for each outstanding share, a 49 percent premium to its May 19 closing stock price and a 15.6 percent premium to the company’s all-time high stock price.
The deal value includes debt to be refinanced. In its 2016 annual report, Nutraceutical said its total debt grew from $34 million in 2012 to $43.5 million last year with EBITDA growing from $35.3 million to $43.4 million over the same period.
Nutraceutical and HGGC representatives did not return requests for comment.
Founded in 1993, Nutraceutical manufactures, markets, and distributes branded nutritional supplements and natural products through health and natural food stores. Its portfolio contains more than 7,500 products sold under more than 70 brands including, raw honey distributor Honey Gardens and Paleo Planet, which provides plant-based ingredients compatible with a “paleo” diet.
“Nutraceutical is a great example of a roll-up strategy carried out with consistency and dedication over the last 25 years,” HGGC managing director and chief operating officer Les Brown said in a statement. “We have long admired their disciplined market approach, which has allowed the company to consistently generate strong financial returns and positive cash flow.”
The transaction is expected to close in the second half of 2017, following a 60-day period during which Nutraceutical will solicit and evaluate alternative proposals.
HGGC’s investment in Nutraceutical is the latest sign of private equity interest in functional foods and reflects an increasing health-consciousness among consumers that is driving investment across the food sector. According to a report released earlier this year by BCC Research, the global nutraceutical market is expected to grow by 7.5 percent annually through 2021 to reach $285 billion in annual sales.
Formerly Huntsman Gay Global Capital, HGGC is a private equity firm headquartered in Palo, Alto, California. The firm is investing its HGGC Fund III which closed on $1.8 billion in December, exceeding its $1.5 billion target and its predecessor’s $1.3 billion 2015 close.
HGGC’s portfolio includes one other food-related investment, in Mama Rosa’s, an Ohio-based refrigerated pizza provider.