Neptune Wellness Solutions Inc. NEPT NEPT agreed to acquire a 50.1% interest in baby food and snack company Sprout Foods for $6 million in cash and $12 million via issuance of 6.74 million Neptune shares.
The company's shares spiked 92% premarket ahead of the announcement.
Sprout is a portfolio investment of Morgan Stanley Expansion Capital (MSEC), which will subsequently become a shareholder in Neptune.
Under the deal, Sprout will become a subsidiary of Neptune.
In addition, Neptune is vouching for a $10 million note issued by Sprout in favor of MSEC.
Sprout’s existing leadership team with CEO Capp Culver with stay with the company.
Sprout is said to be the fourth top-selling organic baby food brand on Amazon AMZN and has around $28 million annual revenues. Its three major brands are Sprout, NurturMe, and Nosh.
Neptune projects for the deal to yield high revenues for both companies, and is also planning new products with the Sprout label.
"We are thrilled to welcome Sprout into the Neptune Wellness family and to be working alongside MSEC to continue Sprout's growth. We value the team's confidence in Neptune and look forward to working together as we grow Neptune's CPG brand portfolio," Neptune CEO Michael Cammarata said. "Sprout fits perfectly into Neptune's existing portfolio of innovative and disruptive health and wellness brands, including Neptune Wellness, MaxSimil, MoodRing, Forest Remedies and Ocean Remedies."
Lincoln Isetta, Managing Director, Morgan Stanley Expansion Capital noted they trust in the expertise of Neptune’s management team and “are excited to continue building out Sprout's growth through Neptune's compelling brand platform."
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