SOUTH AFRICA – Nestlé announced that its health science division has agreed to acquire a majority stake in plant-based nutrition company Orgain.
The transaction, the terms of which were not disclosed, is subject to customary regulatory approvals and includes an option for Nestlé Health Science to fully acquire Orgain in 2024.
Butterfly, a food-focused buyout firm, acquired a majority stake in Orgain in November 2019, according to a statement at the time.
Butterfly’s limited partner, the Ontario Teachers’ Pension Plan, participated in the transaction as a minority stakeholder.
According to a statement, Orgain’s founder, Dr. Andrew Abraham and Butterfly Equity, will remain minority shareholders in the company. Abraham will continue to serve as CEO.
Orgain, which was founded in 2009, sells adult and children’s products such as powders, bars, shakes, and almond milk.
“Nutritional protein plays a key role in supporting our health and wellness, whether we enjoy an active lifestyle or are facing health challenges,” said Greg Behar, of Nestlé Health Science.
“Orgain’s emphasis on clean, all natural, plant-based, organic ingredients have made it a leader in the, and we look forward to combining our companies’ expertise to bring Orgain to more people around the world,” he added.
Butterfly, based in Los Angeles, U.S., began looking into a sale or initial public offering of Orgain last year, valuing the company at around US$2 billion.
Orgain is an addition to Nestlé Health Science’s existing portfolio of nutrition products that help people live healthier lives.
The deal is the latest move by Nestle CEO Mark Schneider, whose portfolio transformation and turnaround at the world’s largest food company has been praised by investors and analysts.
Schneider has overseen a series of acquisitions in recent years to strengthen Nestle’s health and wellness portfolio, adding to faster-growing categories that have helped the company return to mid-single-digit sales growth.
Nestle purchased companies such as nutritional supplement provider Bountiful Co. and hydration tablet maker Nuun & Co. last year.
The CEO has not shied away from divesting sluggish businesses, including a US confectionery unit and mass-market bottled-water brands, as well as its skincare division.
Orgain will contribute to Nestle’s sales growth this year, but will have a minor impact on the Swiss company’s margins, according to the Swiss company. Bloomberg reported last year the protein powder maker had annual sales of about US$400 million.
The CEO has also been active in divesting sluggish businesses, including a US confectionery unit, mass-market bottled-water brands, and its skincare division.
Orgain’s financial advisers included Bank of America Corp., Goldman Sachs Group Inc., and Mally Collective. Legal counsel for the company was provided by Kirkland & Ellis and Giannuzzi Lewendon.
Earlier, Nestlé acquired Aimmune for US$2.6 billion in August 2020, and the food allergy-focused company now serves as the point pharmaceutical business for Nestlé Health Science.
This acquisition has further strengthened and complemented the company’s existing focus on nutrition science and a holistic approach to treating food allergies and other food-mediated conditions.
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