Hi-Tech Pharmaceuticals ("Hi-Tech"), a leading global provider of Sports Nutrition products, Contract Manufacturing, and FormuTech Nutrition ("FormuTech"), one of the fastest-growing Sports Nutrition companies in the United States, today announced that they have entered into a definitive agreement in which Hi-Tech has agreed to acquire FormuTech. The transaction will enhance Hi-Tech's leading Sports Nutrition arsenal and expand its distribution through FormuTech's strong distribution network.
"The combination of these two great companies accelerates Hi-Tech's Sports Nutrition growth strategy, substantially boosts our Sports Nutrition portfolio and diversifies our business stream," stated Hi-Tech Chairman, President and CEO Jared Wheat. "We believe this strategic transaction will enhance our industry-leading Sports Nutrition position by expanding market opportunities. FormuTech brings strong relationships to enhance our position with Sports Nutrition distributors, and a highly experienced management team to support Hi-Tech's continued growth."
Wheat continued, "Our strong operational structure and aggressive acquisition strategies have enabled the continued growth of our Sports Nutrition business and will increase profit margins due to ability to bring the production of FormuTech products to our industry-leading manufacturing facilities. Together, our combined company will have an even larger product portfolio, broader geographic reach, and enhanced scale." As a leading provider of premium Weight Loss and Bodybuilding products in the sports nutrition category, FormuTech's brands align with the company's continued focus on Sports Supplements, while further diversifying the Hi-Tech portfolio. FormuTech produces Lean EFX®, one of the top weight loss aids in the industry, which will continue to bolster our Diet & Energy portfolio such as: Fastin®, Lipodrene®, Stimerex-ES®, and HydroxyElite®.
Key Benefits of the Transaction:
- Accelerates Sports Nutrition and International Growth Strategy
- Expands market access across a larger global platform in all key countries
- Increases market share in Diet & Energy category with top brands like Lean EFX®
- Positions Hi-Tech to capture additional share of the $30 billion Sports Nutrition market
Just the sports nutrition category, which includes powdered and ready-to-drink, grew by 13 percent in 2013, a healthy jump from an already strong 11.7 percent the previous year. The largest portion of the sales in that market comes from sports and energy drinks and shots, which make up 56 percent of sales ($17.1 billion). The second largest category is sports nutrition supplements at 15 percent ($4.5 billion), followed closely weight-loss meal replacement supplements at 11 percent ($3.3 billion) and Weight-loss pill-form supplements at 6 percent ($2 billion).
"Lean EFX® products will serve as a growth catalyst for our Weight Loss segment, providing this division with another leading brand in the high-growth sports nutrition category," said Steve Smith, Executive Vice President at Hi-Tech Pharmaceuticals. "The acquisition of FormuTech expands our offerings of mainstream, weight loss and sports nutrition products, including protein-rich foods, and broadens our appeal with younger consumers. Lean EFX® premium Diet & Energy aid further enhance our balanced business model."
Bruce Davis, CEO of FormuTech, commented, "Hi-Tech's impeccable reputation for pharmaceutical-grade quality, strong innovation and manufacturing expertise make it a perfect complement to our business. Additionally, having access to their extensive production capabilities across a variety of product formats such as energy shots and ready-to-drink beverages, and being able to offer our customers access to manufacturing and distribution facilities in Atlanta, Georgia and Reedsville, Pennsylvania is a significant competitive advantage." The merger, in combination with an expansive capital investment program, will create world-class formulation, product development and production capabilities across in excess of 400,000 square feet of manufacturing space. "Compliance and enforcement have raised the bar for manufacturers, and this merger creates a top-tiered company with a critical mass of scale and capabilities in an otherwise fragmented segment of the market. Hi-Tech and its Sports Nutrition brands will be a one-stop shop for Sports Nutrition stores."
Hi-Tech remains true to the principals that the company was built on - innovation, quality and consistency, and will always be dedicated to ensuring that these principals remain uncompromised. Hi-Tech will continue to provide the finest-quality, innovative, science-based Sports Nutritional supplements and Diet & Energy Aids," says Wheat.
Other nutrition companies looking to increase scale, revenue, market share, and competitive advantage have also been active with mergers and acquisitions. Hi-Tech has been able to increase its market share in the United States through the acquisition of Florida-based Synergy Nutritional Industries in 2005, and gained a larger market share when it acquired Advanced Performance Supplements ("APS") in 2011. Hi-Tech gained further industry dominance when it acquired Nittany Pharmaceuticals in Pennsylvania and ALR Industries in California in 2012. Hi-Tech's recent strategy has been, and according to its leaders will continue to be, growth through M&A activity. The most recent acquisition by Hi-Tech of FormuTech Nutrition is the second acquisition for Hi-Tech in 2014 and will likely not be the last of the year.
Hi-Tech Pharmaceuticals, Inc.