Nestle Acquiring Atrium Innovations: A Move to Tackle Growth Deficiencies

Nestle, the maker of Hot Pockets and Purina dog food, is expanding into vitamins and supplements by buying Atrium Innovations for $2.3 billion.

The world's largest packaged food company said on Tuesday it will buy the maker of vitamins, probiotics and meal replacements from a group of investors led by Permira Funds, as per a report published on The New York Times.

About 80 percent of Atrium's sales come from the United States, meaning there is still room to buy businesses elsewhere, such as the vitamins unit being sold by Germany's Merck, which has a large presence in emerging markets and is also being looked at by Nestle, as per the report.

“We continue to look for opportunities in things that make sense in very disciplined fashion,” said Greg Behar, head of Nestle Health Science, the division that will house Atrium Innovations. Mr. Behar was quoted on Reuters.

The deal is expected to close in the first quarter of 2018, subject to customary approvals. 

Established in 1999, Atrium’s 2017 sales are expected to reach almost US$700 million. Its largest brand is Garden of Life, which is sold in more than 14,000 health food stores and online in the U.S.

Atrium and its 1,400 employees will become part of Nestle Health Science. Its existing management team will remain in place, headed by president and CEO Peter Luther.

This is Nestle’s fourth purchase in recent months. It announced deals for Sweet Earth vegetarian foods and Blue Bottle coffee in September and Chameleon Cold-Brew coffee in November.

Atrium was advised by Morgan Stanley, RBC Capital Markets and William Hood & Co, a division of AXIA Capital Markets.