Neptune Wellness Solutions (NEPT.T) grabbed a controlling interest in Sprout Foods, originally a portfolio investment of Morgan Stanley Expansion Capital (MSEC) today, according to a press release.
The transaction will make investment funds managed by MSEC a direct major shareholder and partner in Neptune, which will help the company to grow Sprout from within its brand portfolio of consumer products.
“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. 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,” said Lincoln Isetta, managing director, Morgan Stanley Expansion Capital.
Neptune Wellness Solutions is a global health and wellness company involved in the creation and distribution of environmentally friendly, and ethical consumer products. Sprout Foods, in contrast, has been around since 2008, and grown in that time to become an organic plant based baby and toddler snack food company with USD$28 million in annual net revenue. They have also been a portfolio company of MSEC since 2018.
Sprout acquisition details at a glance:
- Neptune has acquired a 50.1-per-cent interest in Sprout, which will operate as a NEPT subsidiary.
- Sprout is currently the No. 4 top selling organic baby food brand on Amazon.
- Neptune is guaranteeing a $10-million (U.S.) note issued by Sprout in favour of MSEC.
- Sprout’s three main brands are Sprout, Nosh and NurturMe.
- These brands are currently carried in leading retailers like Publix, Wegmans, HEB, Target
- The transaction includes a $6-million (U.S.) cash payment and the issuance of 6,741,573 Neptune common shares having a value of USD$12.0-million (U.S.).
Sprout’s current management team, including CEO Capp Culver, will remain with the company.
“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 [consumer packaged goods] brand portfolio. 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,” said Michael Cammarata, chief executive officer and president of Neptune.
Neptune Wellness jumped 17.8% on the news, an increase of $0.59 to close at $3.91.