Chr. Hansen strengthens probiotic segment with US$530m UAS Labs acquisition
11 Jun 2020 --- Chr. Hansen Holding is set to acquire US-based UAS Laboratories LLC (UAS Labs) for US$530 million. The acquisition of the B2B company specializing in clinically documented probiotics will strengthen and expand Chr. Hansen’s global microbial platform and Human Health business. The company also notes the move is aligned with the strategy of pursuing bolt‐on acquisitions that fit into the microbial platform. The acquisition is still subject to approvals.
“We believe that the UAS Labs acquisition will accelerate our efforts to grow our Health & Nutrition business globally, especially in the Asian markets,” says Mauricio Graber, CEO of Chr. Hansen.
“We are excited about the acquisition of UAS Labs and look forward to welcoming all its talented people, to join forces in our shared purpose – to develop and expand the global probiotics market, and building upon the strengths of both companies. The two UAS Labs production facilities in the US will increase our flexibility and capacity to produce, and also create a better balance in our geographical footprint,” Graber explains.
UAS Labs is being acquired from the private equity fund Lakeview Equity Partners, management team and other shareholders. UAS Labs has 230 employees and is expected to generate revenues of around US$85 million and EBITDA above US$30 million before synergies in 2020.
NutritionInsight reached out to Chr. Hansen for further comment on the significant move. “The acquisition is now subject to antitrust approvals and legal review. Until final closing, we unfortunately cannot give any comments or elaborate on the deal,” the company’s representative states.
Important takeaways from the acquisition
Chr. Hansen has disclosed the numerous benefits which may stem from the acquisition, including:
UAS Labs has a strong organic growth track record based on documented strains and high‐potency multi‐species blends of dietary supplement probiotics, serving a range of application areas.
Six trademarked strains which have potential in health areas including digestive disorders, immune stimulation, infant probiotics and weight management.
Broader offerings to customers will generate revenue synergies with current customers, and also provide access to new customers.
Two Good manufacturing practices (GMP)-certified facilities in Wisconsin, close to Chr. Hansen’s own facilities in Milwaukee, with fermentation capacity and downstream processing, will complement Chr. Hansen’s own facilities. This will allow increased flexibility in phasing of CAPEX projects in the US the coming years.
Strong fit to Chr. Hansen with significant potentials for production, innovation and commercial synergies, primarily within Human Health.
Chr. Hansen’s outlook for 2019/20 is unchanged, although there will be a minor negative impact to EBIT, depending on the timing of the closing.
Minor EBITDA accretion in 2020/21, EBIT margin neutral to slightly accretive by 2024/25.
“We believe that the UAS Labs acquisition will accelerate our efforts to grow our Health & Nutrition business globally, especially in the Asian markets,” says Mauricio Graber, CEO of Chr. Hansen.
“The strategic vision of UAS Labs’ executive team, who we originally partnered with in this investment, took UAS Labs to a new level within the global probiotics industry. We are thrilled to have partnered with them. The company is well positioned for continued growth within Chr. Hansen’s business platform,” notes Kent Velde, President of Lakeview Equity Partners.
“Over the past seven years I have led the team at UAS Labs with our science‐backed probiotic solutions. We have grown and matured in our strain to solution manufacturing capabilities and commitment to clinical research. We are excited to join Chr. Hansen, and driven by our shared vision and future,” says Kevin Mehring, CEO of UAS Labs.
No negative financial implications
The acquisition is fully aligned with Chr. Hansen’s capital allocation principles, and does not impact the ability to pay out an ordinary dividend of 40 to 60 percent of net profit, the company states. The purchase price will be financed from a low‐interest bridge facility provided by core banks.
The closing of the transaction is expected within one to three months. Full‐year outlook for organic growth and free cash flow before acquisitions and special items are unchanged. Depending on the timing of the closing, there will be a minor negative impact on the outlook for 2019/20 EBIT margin before special items, but the guidance of around 29.5 percent is maintained.
In 2020/21, there will be a negative impact on group EBIT before special items of around 1 percent‐point (preliminary estimate) due to depreciations of the acquired tangible and intangible assets. The acquisition is expected to have a minor EBITDA accretion already from 2020/21, and to be EBIT neutral to slightly accretive by 2024/25, Chr. Hansen concludes.
The company is making strides in the probiotics space and the acquisition is the last to a string of acquisitions. Most recently, Chr. Hansen also acquired Austrian B2B company HSO Health Care to bolster its position in the probiotics for women’s health space. The move strengthens and expands Chr. Hansen’s global microbial platform with the addition of HSO’s Astarte probiotic range to its portfolio.
In April, Chr. Hansen Group’s US subsidiary, Chr. Hansen Inc., launched an online platform providing inspirational and educational content on probiotics and the human microbiome. Dubbed “The Probiotics Institute,” the platform targets healthcare professions and consumers in the US.
By Kristiana Lalou
