MidOcean eyes further M&A deals after QualiTech acquisition

MidOcean Partners has acquired Minnesota-headquartered food ingredient, animal and plant nutrition provider QualiTech from its founding family for an undisclosed sum.

Chaska, Minnesota-headquartered QualiTech was founded in 1967 and provides savory blends for consumer products, vitamins for livestock feed and specialty nutrition for plants.

New York-headquartered MidOcean’s investment is part of its Food Value Chain initiative that has also included a December 2021 investment into Richmond, Utah-headquartered Casper’s Ice Cream. In September 2018, the mid-market focused firm acquired Florida Food Products from Kainos Capital, which manufacturers clean label ingredients used in packaged meat, foodservice, private label and branded CPG meats and premium pet foods.

MidOcean principal Steven Loeffler told Agri Investor that while FFP and QualiTech serve completely different markets, there are similarities between the clean label customers that FFP’s focuses on and the food ingredients markets that are among QualiTech’s areas of interest.

“They both do have plenty of family-owned businesses, for sure. They can range from small to, frankly, very large. Technically, Cargill is still a family-owned business,” he said. “They are both deeply fragmented markets.”

MidOcean manages $10 billion across private equity and credit units that also include investments in consumer goods companies and business services. The firm has offices in New York and Florida and a network of more than 25 operating executives.

Executives helping manage MidOcean’s QualiTech investment include former Ingredion and Archer Daniels Midland executive Tony DeLio; animal nutrition industry expert Scott Hine and Jim Borrell, who also serves on the Boards of Directors for Farmer’s Edge, Eat Just and AeroFarms, according to his LinkedIn profile.

QualiTech’s food offerings include snacks, cereals, nutritional bars, dairy goods and others. Products for CPG-producing customers include customization options such as corn germ offering a stone-ground appearance, ancient grain puffs that add flavor and texture and custom formulations adding functional fortifications like protein and probiotics.

Loeffler said increasing consumer preference for more options and variety has been an important growth driver in the ingredients market.

“Whether it’s your seasonal offerings or five different new flavors of Oreos, consumers have a desire for more options. That, in turn, creates more business demand for companies like QualiTech who can provide those options and varieties to satisfy consumers’ desires. That has been very much on-trend as the years have gone on,” said Loeffler, who has been with MidOcean since 2013, according to his LinkedIn profile.

Plans for future growth, according to Loeffler, include new product development and potential acquisitions across QualiTech’s markets of animal nutrition, agronomy and food ingredients.

“You will see us be active in the M&A market in these categories,” he said. “Our viewpoint is to go hard at all three.”