Chr. Hansen enters beef cattle probiotic market with US acquisition

18-Jan-2016 - Last updated on 18-Jan-2016 at 16:07 GMT

Danish probiotic producer, Chr. Hansen, has acquired US microbial technology developer, Nutritional Physiology Company (NPC), for $185m.

The deal, which is subject to the standard regulatory approvals, is funded through Chr. Hansen’s own cash holding and current credit facilities. The Hørsholm headquartered group said it underlines its expectations for continued growth in the direct fed microbial feed additives market.

Kansas based NPC’s portfolio includes probiotics, mainly focused on the feedlot and dairy cattle segments, that were developed with the goal of improving gut health and stabilization of the GI tract to help the animal’s immune system.

The acquisition will add to Chr. Hansen’s feed probiotic range:

“NPC and Chr. Hansen are a very good fit. We are not in the beef cattle probiotics segment so the deal gives us a way in there. And we hope to leverage its distribution network to expand our reach in the US with our products such as silage inoculants.

Meanwhile, NPC is a relatively new entrant to the poultry segment so it can capitalize on our expertise in that market,” Søren Westh Lonning, CFO, Chr. Hansen told FeedNavigator.

R&D expertise

He said that NPC also has been very active on the intellectual property registration (IPR) front and has established research alliances with numerous universities.

Chr. Hansen, which just reported 14% organic growth with revenue €214m ($232m) in its Q1 financial results for 2015-2016, would look to sell the NPC beef cattle probiotics globally, said Lonning.

“Our eventual goal is to target the larger farms, particularly in Latin America and China, with those beef cattle microbial products, as that scale of operation typically has informed technical support staff. Establishing a relationship with the veterinarian on such a farm can save our sales teams a lot of time and resources,” he said

The CFO said Chr. Hansen operates through different sales models including the direct to feed mill approach, though distribution networks or direct to large scale farms. “The strategy employed really depends on the livestock segment and geographical market in question,” said Lonning.

The Danish company, which also produces enzymes, colors and cultures, said it expects the acquisition of the US company to be finalized during the first quarter of 2016.

NPC, which has 52 employees and was established in 1993, was bought by private equity group, Halifax Partners in 2008. It reported revenues last year of $41m, along with earnings before interest, taxes and amortization (EBITA) of $10m.