Nexira president Stéphane Dondain told us Tournay’s complementary range of cranberry, other fruit, soy, rice and herbal extracts (many organic), along with its state-of-the-art production facility near Bordeaux, had made it the number one target in a months-long process.
“Cranberry is the biggest extract Tournay offers but it is not the only one and they have a wonderful factory near Bordeaux,” Dondain said. “There is potential to double capacity at the factory and we will look at doing that.”
Dondain has made no secret that Nexira – which was formed when the Iranex Group united its subsidiaries Bio Serae Laboratoires and Colloïdes Naturels International in November 2011 – seeks to expand its reach via internal growth and acquisition.
But despite healthy cash reserves for further buys, Dondain said the company would not spend rashly.
“Tournay is a profitable company and the EBITDA-investment cost multiple falls between 8-10, which is the standard for acquisitions in this industry. We have acquired an interesting range of products and can boost their reach with our international sales and marketing network.”
Nexira revenues jumped 17% in the past year to around €100m and it has forecast a turnover of €125m by 2015, with health and nutrition ingredients set to account for 35% of that figure.
Players in the US – where a potential buy-out of a west coast-based supplier fell through at the last-minute last year – along with Asia, were being closely scrutinised for potential further growth.
The Tournay name would cease to exist within a couple of months, although both companies have booked space at the upcoming Supply Side West trade show in Las Vegas. Tournay staff, including upper management, are expected to stay on under the new structure.
“EU health claim rules making it too hard for smaller companies”
Tournay Biotechnologies owner David Tournay said his company had not been thinking of selling the 21-year-old enterprise, but the company had been struggling under the weight of new European Union laws around health claims and other matters.
There is no approved EU health claim for cranberry’s ability to benefit urinary tract infections for instance, a state of affairs that is set to intensify as non-authorised claims can be stripped from the market come the middle of December this year. That includes previously approved cranberry-UTI claims in France.
Indeed few botanical extracts have won claims and about 2000 are yet to be assessed.
“It is more and more difficult for smaller companies in Europe, even those with high-quality products,” Tournay reflected. “With the health claims regulation there is a lot of uncertainty. The EU health claim rules are making it too hard for smaller companies. Nexira have big regulatory and marketing teams so it is better to join the bigger group and not be a small fish in the tank.”
Tournay added: “The fact that most of our sales are in France, Germany, Italy, Spain and Poland did not help either. Nexira will offer significant growth opportunities.”
His firm had invested, “about €3m” in its Bordeaux extraction facility. “We are keen to work with Nexira and increase production at the facility. And the fact we are both French will help the integration for sure.”
Despite the cranberry claims constriction, the sector has not been want for merger activity with Naturex earlier this year buying French cranberry and extracts supplier, Burgundy, and following that up with the acquisition of Massachusetts-based cranberry specialist, Decas Botanical Synergies,
Bio Serae offerings include cactus extract Cacti-Nea while the CNI stable includes Fibregum and Equacia.