Neptune acquires Biodroga

14 Jan 2016

Neptune has acquired Montreal-based, privately held Biodroga - a solution provider of omega-3s and other functional ingredients to branded marketers in the nutraceutical industry - for Can$15 million.

Neptune acquires Biodroga

Neptune has acquired Montreal-based, privately held Biodroga for Can$15 million.

Biodroga is a solution provider of omega-3s and other functional ingredients to branded marketers in the nutraceutical industry, primarily in North America. The company’s customised product offerings primarily include omega-3s, along with other essential nutritional ingredients that are used in specialty formulations. Biodroga develops and distributes these solutions as turnkey finished supplements that are ready for sale, primarily as softgel capsules and liquids.

According to Neptune, the business combination is highly complementary and further positions it for success by adding a new growth vehicle in a significantly larger addressable market.

“Biodroga offers a scalable solutions platform, with a broad range of product development capabilities and cross selling opportunities," said Jim Hamilton, President and CEO of Neptune. "The acquisition allows us to play a much broader role in the customer value chain, leveraging our collective capabilities with an expanded set of offerings. It also opens up an important window on innovation and enhances our capabilities to develop new nutraceutical products."

The company says that this is a pivotal move and sees the acquisition as a key cornerstone to support additional business development. The combined company should deliver considerable value for customers and shareholders, it believes, with the purchase expected to be immediately accretive to shareholders.

"This transaction is fully in line with our strategy to move further up the value chain, and build on our current solution business by further progressing into specialized product development services, such as formulation and blending," added Hamilton. It also follows market trends in the dietary supplement space. As the industry develops, businesses are increasingly looking for tailored solutions, such as condition-specific formulations, something that Biodroga facilitates. In turn this creates increased customer interaction, opportunity and "stickiness" due to the heightened partnering created through customized offerings.”

"Neptune brings important business development expertise, a leading krill oil product line, along with a more diverse customer base and an extended geographic reach," said Robert Cajolet, President of Biodroga. "As well, both companies share a similar culture - a drive for excellence and quality, a strong focus on customer satisfaction and an entrepreneurial spirit. Together, we will leverage our collective strengths to channel and accelerate growth beyond what could have been done independently."

For the TTM ending October 31, 2015, Biodroga had revenues of approximately $22 million and EBITDA of approximately $3 million.

"Over the past three years, Biodroga has surpassed industry and segment revenue growth rates and we expect this trend to continue going forward," said Mario Paradis, Neptune's CFO. Considering Neptune's revenue expectations of $5.1 million for the third quarter ending November 30, 2015 and excluding intercompany sales, the combined entity would have annualized sales of close to $41 million on a pro forma basis.”