Quality Botanical Ingredients to Become Health Sciences Subsidiary

LOS ANGELES--Health Sciences Group Inc. signed a letter of intent to acquire the assets and operations of Quality Botanical Ingredients Inc. (QBI) for an undisclosed amount of cash and stock in Health Sciences. Under terms of the letter, QBI operations will become an operating subsidiary of Health Sciences, and key management from QBI (www.4qbi.com) will be kept on. However, QBI will continue to operate from its South Plainfield, N.J., site.

According to Health Sciences (www.hsciences.com), QBI will have a key role in creating a new traditional-meets-alternative product line that Health Sciences plans to launch next year through another wholly owned subsidiary. "With QBI as a synergistic provider of the nutraceutical component of our products, we expect the vertical integration in the production process to translate to higher profit margins while maintaining competitive pricing," stated Bill Glaser, president of Health Sciences.

Health Sciences reported that this transaction is the work of three to four months of planning. "We feel like QBI in particular has strong management and, with some added resources that have not been at their disposal, their growth can be spurred significantly ... to [help them] tap into a much larger market share," Glaser told INSIDER.

QBI president and chief executive officer, Joseph Schortz, said, "In essence, we view Health Sciences as a strategic partner that will bolster our market position by enhancing our product offerings and expanding the scope of our distribution channels."

Schortz told INSIDER, "Looking at mergers and acquisitions these days, the industry seems to be consolidating in various ways. We grew about 35 percent last year, but if you're growing at that kind of rate, you run out of credit. That's something that stunts your growth. To avoid that, you have to strike while the iron's hot."

Once the transaction closes, QBI will continue to service its current customer base. Schortz added, "I don't expect anything to change, except to do what we do better."

Completion of the transaction is subject to final negotiation of an asset purchase agreement, completion of due diligence and satisfaction of customary conditions to closing.