Nagase acquires Prinova: “Takeover presents geographical and portfolio opportunities,” says Prinova exec

04 Jun 2019 --- Prinova’s takeover by Japanese chemical trading firm Nagase will bring both geographical and portfolio expansion opportunities for the US-headquartered distributor, with few fears existing about the company and brand being swallowed up. This is according to Michael Petrushka, General Manager Solutions at Prinova, who was “very positive” on the news of the takeover.

“What we know of them from other companies that they bought, is that Nagase buy, build and run. This is a different model than being run by private equity, where they are buying you to have a transaction later,” Petrushka tells FoodIngredientsFirst. “Nagase has been around for 180 years, so they are a company that has bought, held and built well. They are looking at the long term,” he adds during an interview on the IFT Food Expo 2019 show floor in New Orleans yesterday.

Michael Petrushka, General Manager Solutions at Prinova.“What made us attractive to Nagase is the speed that we work, the innovation we brought and really the integrated value-added model,” he claims. Petrushka maintains that the timing of the takeover was purely coincidental and was unrelated to the start of the huge food ingredients event.

Nagase Group is a leading chemical trading firm in Japan founded in 1832 with annual revenues of approximately US$7.5 billion. Nagase Group has continued to expand its business by enhancing value-added functions/services such as manufacturing, processing and R&D capabilities. In 2012, Hayashibara, a well-known Japanese company with strong R&D expertise in biotechnology actively developing and manufacturing functional food ingredients joined the Nagase Group. Today, Nagase Group owns more than 100 group companies around the globe, manufacturing and distributing various products such as resins, functional polymers, plastic products, electronic materials, functional food and pharmaceutical ingredients and intermediates.

“This acquisition marks a significant milestone in our continued effort to expand Nagase Group’s global footprint in a high value-added business,” says Kenji Asakura, President and CEO of Nagase Group. “The addition of Prinova’s expertise, unique positioning and portfolio offering enables us to expand our food and nutrition ingredients value chain in North America, Europe and also in Asia.”

“In Nagase, we have found a parent company that shares many of our cultural characteristics and values, including a commitment to maintaining the highest standards of professionalism, integrity and sustainability,” says Don Thorp, President of Prinova USA. “Nagase has a tradition of helping companies develop the organizational infrastructure needed to expand their operations while providing them the freedom to run independently. It also understands the value we place on independence and innovation and is enthusiastic about the business and culture we have built.”

The companies expect the transaction to close within 60 days.

While the takeover price for the acquisition was not announced, Petrushka explained that Prinova revenue was around US$800 million in 2018. Some 70 percent of the company’s business is US-based, with 30 percent international. This share has diversified throughout the years, including through the 2017 acquisition of Lycored’s premix business.

For Petrushka, the takeover of Prinova represents a diversification for Nagase, both in terms of portfolio and geographical reach. “Nagase owns over 100 companies and this is diversification for them as they are not really in this space, in terms of doing all the things we do. They don’t make premixes, flavors, or ingredients,” he notes. The company’s large North American footprint is also part of the rationale. “They have six of their companies there. We have become one of their biggest acquisitions ever and give them a footprint in North America,” he adds.

But Nagase’s portfolio can also gain North American traction through this takeover, including through the addition of trehalose. “Nagase sell some innovative ingredients that we would obviously bring into the Prinova line, with trehalose being one of them. That will be added to our line and we will take it into products, market it and bring it to our customers,” he reveals. Nagase’s TREHA trehalose is marketed as a multi-functional disaccharide with unique benefits for freshness, texture and flavor/aroma in food and beverages.

For Petrushka, Prinova [known as Premium ingredients until 2011] has been enjoying a growth spurt for several years, especially as it has moved into value-added ingredients. He describes the evolution of the company as follows. “We were a brokerage in the 1970s and turned into a distributor in the 1990s. We became an international distributor in 2001 and we started selling flavors and grinding and milling product throughout 2000-2010. In 2010, we bought a company called Vitamins Inc., which became Prinova Solutions [the premix business]. In 2017, we purchased Lycored’s premix business to give us Prinova Solutions on global business,” he explains.

Prinova has become one of the largest distributors of B vitamins, but it has capabilities that range from formulation to flavor and concept development. “We can sell somebody an ingredient, a formulated premix, the flavor or application system, or an integrated product. So we have quite a bit of flexibility in how we work with our customers. We are unique in our industry in our ability to do that, whereby one ingredient company can do all the lines of business that we can,” he notes.

Following the transaction’s close, Prinova’s current worldwide leadership team will remain in place and, within Nagase’s infrastructure, will continue to oversee the strategic growth and overall quality of the Prinova brand.

“For Prinova, we are going from being privately held to having access to public capital, so the ability to fund investments is obviously bigger. Nagase has a big commercial presence in Asia-Pacific, which is an area where we don’t really have one. There is not a lot of geographical or product line overlap between us and Nagase,” says Petrushka. He maintains that the owners of Prinova remain very committed to the company and are expecting to stay with the business as it goes forward.

Prinova bought Lycored’s premix facilities in China and the UK in 2017. The plants have been supplying leading international food companies with premixes to fortify their products with vitamins, minerals and other nutrients. These premixes address the cereal, beverage, dairy, infant formulation and other premix categories, reflecting the ability to deliver product solutions to the entire range of premix markets.

The takeover by Nagase will only help to consolidate Prinova’s APAC position. “We have been growing from a certain amount domestic to more international and I don’t expect that trend to change. We purchased Lycored facilities in China and the larger APAC presence will help our facilities and capabilities in the region in terms of expanding distribution and premix capabilities there,” he notes.

At IFT 2019, Prinova is showcasing its diverse portfolio of nutritional solutions. “Our big push at this event is trying to be a company that brands turn to, to help develop a whole line,” Petrushka says. “The demos that we are showing here have an energy, relaxation or beauty focus. These are all basically health themes where we can help someone develop products for,” he concludes.

Since 1978, Prinova has been a leader in providing high-quality ingredients, flavors and value-added nutrient fortification products to the global food, feed and wellness industries. Prinova operates 6 plants and holds strategic stocks in 15 distribution centers around the world to ensure continuity of supply and is the leading global supplier of vitamin C, B and food grade amino acids. The company also has a team of application and technical specialists within their R&D and Quality Laboratory to help customers develop, improve, and enhance the taste and function of their products. Prinova’s facilities are BRC certified. The company’s main corporate office is in Carol Stream (Illinois) with the European head office in the UK and a regional office in Canada. Additional regional offices are located throughout the US as well as global sales associates in Mexico, Spain, Germany, Belgium, France, Australia, Turkey and China.

By Robin Wyers in New Orleans