- Global nutrition group Glanbia will acquire Watson, a non-dairy ingredient solutions business based in Connecticut, for $89 million, announced in its earnings report Wednesday.
- Watson is a manufacturer and supplier of bakery ingredients, custom nutrient premixes and edible films that earned $101 million in 2018 revenue. This acquisition gives Ireland's Glanbia Nutritionals' a production footprint that now spans from U.S. coast to coast in addition to its facilities in Germany and China.
- The company noted in its release that its latest acquisition would help it expand its ingredients portfolio.
Due to a rising demand for food fortification and an increasing utilization of nutrient premixes by infant nutrition manufacturers, the global food premix market is anticipated to see an exponential growth between 2019 and 2023, according to Markets Insider.
With such an optimistic forecast for the future, Glanbia's acquisition of Watson could be on the money. Already, the Irish company has seen growth from its current portfolio of custom nutrient premixes. Earnings per share rose 4.5% on a reported basis last year, and the Glanbia Performance Nutrition portfolio delivered revenue growth of 9.5%. Glanbia seems to be on an acquisition spree to boost its nutrition portfolio. The company's performance nutrition brands now also includes Slimfast, which it purchased for $350 million last year.
And the company expects a big pay off from this M&A. Talbot said in an earnings call that Glanbia's outlook for 2019 is positive and expects the company to deliver 5% to 8% growth in adjusted earnings per share. With that much anticipated growth, there could be more acquisitions down the line.
"We are focused on growing our Nutritional Solutions business both organically and through acquisition," Glanbia's Finance Director Mark Garvey said in an earnings call.
By purchasing Watson, Glanbia looks to leverage the company's specialization in health and nutrition products, which aligns with current consumer demand. The capabilities and product enhancement that Watson offers though — microencapsulation, agglomeration, micronizing, spray drying and film technology — do not fully cater to trends toward wholesome, natural ingredients and fresh and better-for-you products.
However, Glanbia does not seem concerned seeing as its recent acquisitions also include Optimum Nutrition, ThinkThin and SlimFast — all of which develop items that promote health through specialty products that contain premixes with modified ingredients. While all the brands under Glanbia's umbrella have seen success individually, the question now is whether this strategy of collecting specialty weight loss products to position the company as a health and wellness brand will lead to long-term success.
The company is betting that the current trend toward health will come full circle as consumers continue to seek effective solutions to improve their health and return to products that are fortified and enhanced to give them the extra infusion of proteins, vitamins and minerals they are looking for.