The transaction - under which RiceX will become a wholly-owned subsidiary of NutraCea- unites two companies with a shared provenance: both were founded by NutraCea CEO Patricia McPeak.
RiceX first developed the proprietary rice bran stabilization process to turn the by-product of rice processing into a valuable source of nutrition and manufacture products mainly for the animal feed market.
Founded in 1998, NutraCea took the process a step further by developing the means to create food and nutrition products for human consumption from the rice bran it sourced from RiceX.
Stabilized rice bran is a naturally rich source of vitamins, minerals, and antioxidants, yet it is normally discarded during rice processing.
Nutracea holds six patents for the use of rice bran in nutritional foods to help alleviate the symptoms of certain conditions, including hypercholesterolemia, hyperlipidemia and atherosclerosis, as a supportive therapy for diabetes and to help reduce cholesterol.
NutraCea senior vice president Margie Adelman told NutraIngredients-USA.com that the merger secures access to rice bran to meet the growing demand. The move will also boost the company's profit margin, since it will no longer have to buy in its main raw material.
The security allows the company to act on plans to partner with major food and nutritional supplement companies that have established distribution channels and large marketing budgets, offering both its 30-sku consumer product portfolio for licensing and its ingredient technology for use in its own formulations.
Its aim is to "materially impact" the $60 billion domestic nutraceutical and medical foods market, as well as the $34 billion domestic pet care and pet food industry.
According to Adelman, demand for rice bran is growing thanks to the example set by large food giants such as General Mills, which are promoting the health benefits of whole grain products.
"They are paving the way in educating the consumer that they need to consume more whole grain products," she said.
And there is no likelihood of the growing demand exceeding supply of rice bran, either. Sixty million metric tones of rice bran are thrown out by rice mills around the world each year or used as low-grade animal feed.
NutraCea plans to tap into this resource and is looking to forge partnerships with a number of large rice mills, in which it will fit RiceX's technology to turn the waste product into valuable, nutritious products.
The company said in a statement that this business model "projects revenues many times the construction costs during the effective life of the plants". But beyond just generating profit, it has another, altruistic benefit - allowing NutraCea to replicate RiceX's feeding program for children in Guatemala to malnourished populations on a worldwide basis.
RiceX distributes a rice bran drink to 67,000 preschool children in the Latin American country, in partnership with the USDA and the Christian Childrens' Fund.
The nutrition levels of 150 of these children were studied over a ten-month period. At the start of the study, 37 percent suffered from acute or chromic malnutrition but after just six months acute malnutrition had been eradicated and chronic malnutrition was reduced to just five percent.
The Guatemala program costs $0.16 per child per day with the product imported from the US. By equipping local plants with the technology to produce rice bran, the cost will be reduced to $0.05 per child per day.
"We believe we will be able to end world hunger - or certainly make a huge impact on it," said Adelman.
Last year NutraCea's sales of consumer rice bran products, including RiceMucil, RiceSolubles and Cea100, reached $1 million.
Between them, the merged companies now control 100 per cent of the human market and 50 percent of the combined human and animal markets for rice bran, which have a total value of $12 million.