Elder Pharmaceuticals Ltd has finalized a 20 per cent strategic stake in Neutra Health PLC, an AIM listed company in the United Kingdom. Elder's subscription for shares in Neutra Health, worth about Rs 47 crore. This is Elder's first investment in European markets in respect of 35197026 equity shares having a face value of 10 pence at 16 pence per share. The acquisition offers Elder an established platform for rolling out its products through all its key channels to the European nutraceutical market.
Jagdish Saxena, a main board director of Elder, will be appointed as a director of NeutraHealth. All of these proposals will take effect from, and are conditional upon, the existing shareholders of NeutraHealth giving their approval in a general meeting, expected to be held in August.
NeutraHealth has a turnover of £23 million and a market capitalization of close to £16.8 million. NeutraHealth, which has established directors like Gulam Noon, the curry entrepreneur of UK and Martin Gatto, a former CFO of Hilton International, the hotel group. Among the companies directly owned by NeutraHealth are BioCare Limited, Nutrigold Limited and Brunel Healthcare Limited. These companies market and distribute a range of nutraceutical products such as vitamins, specialised health supplements, over the counter medicines and "detox in a box" health treatments, as well as the TravelGuard range of travel-related health products.
NeutraHealth intends to use the proceeds of the subscription for shares by Elder to reduce existing debt and develop its business interests in the high growth, niche area of the expanding functional foods sector. The dietary supplements sector is also growing in popularity as consumers become more health conscious. It is estimated that half of the population take vitamin supplements. Overall, the nutraceutical sector is growing by 10 to 15 per cent a year and this is likely to increase with the aging population.
Alok Saxena, Director (International), Elder, said, "We have been looking for the right opportunity to invest in the regulated markets and this transaction begins that process. NeutraHealth has strong market positions in the vitamins, minerals and supplements sector of the United Kingdom. Its business covers all the aspects of the distribution channels viz. ethical (doctors), large format retails stores, independent retailers and direct to consumer. In the long run, Elder plans to grow organically as well as through acquisitions, both within and outside India. We will continue to look for companies with notable market presence and which are profitable, cash generative and growing. We continue to seek and investigate acquisition opportunities."
Says Michael Toxvaerd, chief executive, NeutraHealth, "The infusion of funds through Elder's equity investment and Elder's expertise in mass scale distribution should position NeutraHealth to grow at a much faster rate. Our strategy to date has been to build a group of companies within the nutraceutical market which will deliver growth through organic expansion and through strategic acquisitions. Whilst we plan to continue to make strategic acquisitions that complement our existing businesses, we also plan to expand our production innovation, direct-to-consumer sales channels, export networks and supply chain synergies."