John Barrymore is managing partner at LA-based corporate finance group 6Pacific, which invested in New Chapter in 2005. He also represented New Chapter in its recent negotiations, which ultimately led to its sale to P&G.
He said:“When we invested in New Chapter in 2005, the leading products were its multivitamins and Zyflamend [a proprietary, patented blend of 10 botanicals sold on an anti-inflammatory platform].We could see $50m in sales potential for that as a standalone product.
“But since then it has launched several products that have similar breakaway potential and its innovation engine continues to crank out innovative products and attract new consumers to the category. In 2005, New Chapter was probably a number 10 brand in its channel, but now it’s number one.”
It was a very successful investment for us
He said: “We haven't disclosed our ownership, but it was a minority interest in both preferred and common stock. It was a very successful investment for us.”
Procter & Gamble, which does a lot of R&D work around botanicals, was one of several potential trade and private equity firms interested in New Chapter, which started exploring a range of strategic options more than a year ago, said Barrymore.
P&G was the best fit
He added: “We have had conversations with various parties about a wide range of options from licenses to partnerships to acquisitions to minority investments and I can say that we have never spoken to anybody – trade or private equity – that didn’t emerge from that process with some interest in partnering with New Chapter.
“In the past few months we started to refine that process down to those interested in long-term strategic partnerships.
“And then it became pretty clear that P&G was the company best placed to take the New Chapter brand to the next level. They have clout in the global marketplace and were the best possible fit.”
P&G: New Chapter gives us ‘a meaningful $100m business on day one’
A P&G spokeswoman told NutraIngredients-USA: "This acquisition enables P&G to enter the premium, specialty segment of the vitamin and mineral supplement (VMS) category with a meaningful $100m business on day one."
As to what prompted P&G’s move into the dietary supplements market, she added: “Entering the VMS category is key to delivering on P&G’s growth goals for our health care business. The VMS category is the largest in the OTC industry ($75bn) and one of the fastest growing (+6%).
“This category is growing especially fast with consumers who are focused on aging well and preventing/postponing advancement of chronic disease.”
6Pacific Partners provides M&A and financing advisory to corporate and private equity clients, while 6Pacific Capital makes direct equity investments in “small, rapidly growing consumer companies”.
Click here to read more on the P&G/New Chapter deal