Nestlé: big acquisition with $2.3 billion bid for supplement maker Atrium

7 years ago - Published in Finance, Fundamental Analysis

Nestlé Chief Executive Officer Mark Schneider made his biggest acquisition yet, agreeing to buy Canadian dietary supplements maker Atrium Innovations for $2.3 billion in a bid for growth beyond stagnating mainstream food brands.

The world’s biggest food company is acquiring Westmount, Quebec-based Atrium from an investor group led by Permira Funds, Nestlé said in a statement Tuesday. The Swiss owner of Nespresso and Lean Cuisine is paying cash for the Garden of Life supplement maker, whose 2017 sales are expected to approach $700 million.

Nestlé said Atrium, which was founded in 1999 and employs 1,400 people, would become part of its health science unit but continue to be managed by its existing management team, led by Peter Luther, chief executive.

 

Greg Behar, chief executive of Nestlé health science, said the deal would extend the Swiss group’s product range with probiotics, plant-based protein nutrition, meal replacements and multivitamins, which would enable “consumers to address their health and wellness goals”.

It will become part of Nestlé's health-sciences arm, which makes products like meal-replacement drinks and nutritional therapies for conditions like diabetes and dysphagia.

That unit had sales of $15.2 billion last year, up 2% from the previous year. Nestlé's overall sales last year were about $90 billion, most of that from businesses like coffee, bottled water, frozen food and candy bars.

Packaged-food makers like Nestlé and Kraft Heinz Co. are being buffeted by a number of forces. Fast-changing consumer tastes have shoppers fleeing some of these companies' big brands in favor of healthier options or locally or more naturally made goods.

Social media and e-commerce has leveled the playing field for some of these small new competitors — making the big firms' research and development and marketing budgets less effective in holding on to market share.

Earlier this year, Nestlé abandoned its long-held annual sales-growth targets after years of missing them. A few months later, activist investor Daniel Loeb took a $3.5 billion stake in Nestlé, which makes Nescafe, Lean Cuisine and Nesquik, and demanded big change.