Canidae, Natural Balance merge for production synergies

Bringing the two companies together will allow Canidae’s factory to produce for both brands. The arrangement will help improve fill rates for both companies.

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(Kovbasniuk | BigStock.com)
(Kovbasniuk | BigStock.com)

The combination of Canidae and Natural Balance pet food companies was a true merger, with both companies maintaining their individual brands, executives from both companies told Petfood Industry. After the deal finalizes, the investment firms L Catterton and Nexus Capital Management will have 50-50 ownership of the yet-to-be-named combined company. 

“It's business as usual for the next few months until the deal finally closes,” Brian Connolly, CEO of Natural Balance said.

“After that there's going to be an integration process between the two companies, which will ultimately end up with the two brands to be managed by the same company,” Jacopo D'Alessandris, Co-CEO and chief commercial officer at Canidae Pet Food said. “It's a one plus one equals three in this situation because there are some strong complementarities and synergies. First of all, from a production standpoint, Canidae owns its own facility in Texas. We make more than 90% of our food ourselves. We control the entire supply chain. Even the packaging is made in the U.S.”

Production strategy behind Canidae, Natural Balance merger

Bringing the two companies together will allow Canidae’s factory to produce for both brands, D'Alessandris said. The arrangement will help improve fill rates for both companies.

“Natural Balance has a co-packer procurement strategy,” Donnelly said. “Co-packing will continue to be an important part of our strategy for dry, for wet and kibble.” 

The merger will help Natural Balance diversify and manage production risks, he said.

While the two brands are both in the premium pet for specialty space, D'Alessandris said, there are some different channels and retailers among the two companies. Likewise, the merger will open opportunities for expansion in the U.S. and internationally.

Canidae makes their own pet food, Canidae also grows some of its own ingredients through a partnership with a farm in Kansas. Natural Balance will eventually gain access to that source of ingredients, although the recipes and formulations have yet to be developed.

Integrating the supply chain helped Canidae avoid the bottlenecks and shortages that have plagued other pet food companies during the past several years.

Last year, Canidae consistently kept fill rates above 90%, while many competitors were below 50%, D'Alessandris said. While Canidae had some challenges sourcing certain ingredients, for example lamb from New Zealand or vitamins and probiotics from overseas, most of everything else was available because the company controlled those sources.

Natural Balance and Canidae pet food companies to merge

Adapted from a press release:

Natural Balance, a premium specialty pet food brand, and Canidae, a premium, sustainable pet food company, announced they have entered into a definitive merger agreement under which the companies will combine. The combination unites two specialty pet food brands with complementary yet differentiated offerings to drive innovation and growth for the benefit of pet parents everywhere. Terms of the transaction were not disclosed.

For more than 30 years, Natural Balance has offered premium products with high-quality, protein-forward ingredients spanning dog food, cat food and treats. Similarly, since its founding 25 years ago, Canidae has a rich history in the pet food space, offering both dog and cat food products with a focus on goodness for pets and the planet through regenerative agriculture and sustainable operations.

The combination will leverage both companies’ shared passion for improving the well-being and lives of pets through simple nutrition, responsibly sourced ingredients and protein-rich products. The combined company’s flagship offerings will include Canidae’s Pure, Goodness and All Life Stages, as well as Natural Balance’s Limited Ingredient (LI) and Original Ultra product lines.

History of Natural Balance, Canidae, investors

As part of the transaction, L Catterton, a leading global consumer-focused investment firm and majority shareholder of Canidae, and Nexus Capital Management, an alternative asset investment company and majority shareholder of Natural Balance, are each contributing new growth capital to support the successful integration and strategic long-term expansion of the combined company.

Founded in 1989 by actor Dick Van Patten, Natural Balance has exchanged ownership several times, first merging with Del Monte Pet Products in 2014, which became Big Heart Pet Products and was acquired by J.M. Smucker in 2015. In late 2020, Smucker sold Natural Balance to Nexus Capital Management. In 2021, the company had revenues of US$264 million, according to the Top Pet Food Companies Database.

Canidae launched its own pet food ingredient growing operation in Kansas in 2021. As a privately held company, Canidae’s annual revenues have not been available, according to the Top Pet Food Companies Database. The database reported the company had two facilities and 125 employees in 2021.

Statements from both owners

“Both Canidae and Natural Balance have rich legacies, solid brand recognition and strong consumer affinity, and this combination allows us to build on the strengths of each company,” said Andrew Taub, managing partner, and Matt Lischick, partner, with L Catterton. “As a combined company, we will be able to streamline manufacturing capabilities, invest in product innovation and build on each company's partnerships with key pet retailers.”

“Natural Balance has a proven position as a pioneer in the premium specialty pet food industry, and we are confident that Canidae is the ideal partner to enhance and accelerate the brand's strategic growth following the past two years as a stand-alone business,” added Damian Giangiacomo, partner, and Jonathan Whitlock, manager director, with Nexus Capital. “Together, we will create high-quality products anchored around premium, limited ingredient formulas and benefit from enhanced scale and a talented workforce.”

 

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