Switzerland-based Lonza has agreed to buy Benecia, California-based InterHealth Nutraceuticals from Kainos Captial for as much as a $300 million. The purchase price is about 10 times InterHealth’s earnings (EBIDTA for 12 months ended July 2016), broken into one upfront payment and one-earn-out payment. The transaction is expected to close in September 2016 and be immediately accretive to Lonza’s earnings.
“With this acquisition Lonza is taking a further step along our strategic path as a high-value supplier to the healthcare continuum," said Richard Ridinger, CEO of Lonza, in a press release. “Lonza will leverage the successful product portfolio of InterHealth on a global level and in turn will be able to benefit from InterHealth’s proven management and branding capabilities to promote Lonza’s existing product portfolio. We see significant positive synergies from this combination."
InterHealth’s roster of branded ingredients is led by its flagship UC-II® undenatured type II collagen for joint health, and includes Sytrinol® and Cardiaslim® for heart health, ChromeMate® for blood sugar health, and a number of weight management aids such as Lowat®, Meratrim®, SuperCitrimax® and 7-Keto®.
“In joining forces with Lonza, our customers, employees and stakeholders will benefit from being part of a more diversified leader with significantly greater global market presence," said Paul Dijkstra, president and CEO of InterHealth, in an emailed statement. “Our combination of branded nutraceutical ingredients creates an influential global player with a commitment to product research and innovation, which will be incredibly well positioned to redefine the dietary supplement and functional food & beverage industry."
This is the third portfolio company sale by Kainos in the past two months. The middle market private equity firm, which focuses on food and consumer products companies with a lean towards natural and healthy, sold Milk Specialties to even bigger private equity firm American Securities in late June 2016, about five years after buying the protein ingredients supplier. Kainos only owned Kettle Cuisine for one year before selling two weeks ago to Del Monaco Foods. InterHealth was bought by Kainos in early 2014.
Dijkstra explained Kainos Capital’s investment strategy from day one was to build InterHealth’s portfolio of growing and strategically relevant branded ingredients. “Since the Kainos acquisition in 2014, the InterHealth brands have grown exponentially and the timing was right for a strategic firm to take over the brands to further develop them into different markets and to expand customer base," he said. “Over the last three years, InterHealth has acquired a manufacturing facility and two ingredient companies."
InterHealth acquired Chick Cart’s facility in March 2014 and bought 7-Keto from Humanetics in August 2014. Then in May 2015, InterHealth acquired most of the assets of Next Pharmaceuticals, including its Sytrinol and Relora brands.