Laval, Quebec-based Neptune Wellness Solution has acquired a 50.1 percent interest in Sprout Foods, a portfolio company of Morgan Stanley Expansion Capital. The deal reflects a $6 million cash payment, the issuance of $12 million in Neptune shares, and a guaranteed $10 million note. Montvale, New Jersey-based Sprout is a maker of baby food products.
LAVAL, QC, Feb. 10, 2021 /CNW Telbec/ – Neptune Wellness Solutions Inc. (“Neptune” or the “Company”) (NASDAQ: NEPT) (TSX: NEPT), a diversified and fully integrated health and wellness company focused on plant-based, sustainable and purpose- driven lifestyle brands, today announced the acquisition of a controlling interest in Sprout Foods (“Sprout”), a portfolio investment of Morgan Stanley Expansion Capital (“MSEC”). As part of the transaction, investment funds managed by MSEC will become a major shareholder in Neptune and partner with the company to grow Sprout within Neptune’s brand portfolio of consumer product goods.
Neptune is taking a controlling and management interest in Sprout Foods, an organic plant-based baby food and toddler snack company with USD$28 million in annual net revenues. Sprout was founded in 2008 and is one of the fastest growing organic brands on Amazon. Through the acquisition of Sprout, Neptune accelerates its ongoing transformation into a disruptive consumer packaged goods company, providing customers with innovative health and wellness brands that harness the power of plant-based super ingredients. Sprout has been a portfolio company of investment funds managed by MSEC since 2018.
“We are thrilled to welcome Sprout into the Neptune Wellness family and to be working alongside MSEC to continue Sprout’s growth. We value the team’s confidence in Neptune and look forward to working together as we grow Neptune’s CPG brand portfolio,” said Michael Cammarata, Chief Executive Officer and President of Neptune. “Sprout fits perfectly into Neptune’s existing portfolio of innovative and disruptive health and wellness brands, including Neptune Wellness, MaxSimil, MoodRing, Forest Remedies and Ocean Remedies.”
“Morgan Stanley Expansion Capital has enjoyed a long-standing relationship with Neptune Chief Executive Michael Cammarata. Michael is one of the most talented, energetic and innovative leaders with whom we have partnered, and has a compelling track record building brands,” said Lincoln Isetta, Managing Director, Morgan Stanley Expansion Capital. “We believe Michael’s success in this space — coupled with the expertise of Neptune’s Chief Financial and Global Operating Officer Dr. Toni Rinow — positions Sprout for success, and we are excited to continue building out Sprout’s growth through Neptune’s compelling brand platform.”
Sprout Acquisition Details
Neptune has acquired a 50.1% interest in Sprout. Sprout will operate as a subsidiary of Neptune Wellness Solutions.
The transaction consideration includes a USD$6M cash payment, and the issuance of 6,741,573 Neptune common shares having a value of USD$12.0M. Additionally, Neptune is guaranteeing a USD$10M note issued by Sprout in favor of MSEC.
MSEC, an investment team within Morgan Stanley Investment Management, has been providing tailored capital solutions for growth companies for over three decades.
The Company expects the Neptune/Sprout combination to result in significant incremental revenue growth for both companies with several near and long-term revenue synergy opportunities identified as well as an exciting new product pipeline to be launched under the Sprout brand.
Sprout is one of the largest independent organic baby food and toddler snacking companies, with roughly USD$28 million in annual net revenue. Sprout is currently the #4-top selling organic baby food brand on Amazon, with line of sight to a top 3 position.
Sprout’s three main brands are Sprout, Nosh and NurturMe. These brands are currently carried in leading retailers including Publix, Wegmans, HEB, Target, and more.
Sprout’s current management team, including CEO Capp Culver, will remain with the company.
“Sprout was an early innovator in the organic baby food market, driving category expansion and creating optionality for parents who wanted to feed their children tasty, organic foods,” said Capp Culver, Chief Executive Officer of Sprout. “Combining with Neptune’s health and wellness platform will greatly elevate Sprout’s efforts to make innovative, organic products accessible for today’s healthy families.”
About Neptune Wellness Solutions Inc.
Neptune Wellness Solutions is a unique global health and wellness company that is changing consumer habits through the creation and distribution of environmentally friendly, ethical and innovative consumer product goods. Neptune’s simultaneous focus on B2C and B2B customer-oriented brand development provides the Company with international reach and scale from its owned and operated facilities that extract and create product formulation, all the way to the sales floor at top global retailers.
Underpinned by a disruptive spirit, Neptune’s diversified, and fully integrated business model focuses on natural, plant-based, sustainable and purpose-driven lifestyle brands and the use of cannabinoids in household products to make them safer, healthier and more effective. Its portfolio includes emerging brands such as Forest Remedies™, Ocean Remedies™, Neptune Wellness™, Mood Ring™, and OCEANO3™, which are poised for rapid growth and expansion.
Backed with a cost-efficient manufacturing and supply chain infrastructure that can be scaled up and down or into adjacent product categories to identify new innovation opportunities, Neptune quickly adapts to consumer preferences and demand, and is bringing its products as well as other Fortune 100 brands to market through strategic distribution partnerships, mass retail partners and e-commerce channels. Neptune is committed to its core mission of redefining health and wellness and helping humanity thrive by providing sustainable consumer focused solutions. For additional information, please visit: www.neptunecorp.com