Canidae and Natural Balance pet food companies announced last week their merger, with both companies maintaining their individual brands according to representatives from both companies speaking with Petfood Industry. After completion, investment firms L Catterton Capital Management and Nexus Capital Management will hold equal shares in what will eventually become known as one combined entity.
Brian Connolly, CEO of Natural Balance noted. It will continue business as usual until the deal closes officially.
“After that there will be an integration process between the two companies that will result in managing both brands by one company,” stated Jacopo D’Alessandris, Co-CEO and chief commercial officer at Canidae Pet Food. “There are strong complementarities and synergies here – for instance Canidae owns its own facility in Texas where over 90% of their food production takes place; additionally we manage the entire supply chain locally while Natural Balance doesn’t. This should result in stronger results than before!” compared with this partnership being managed under one brand managed by one company.”
Production Strategy behind Canidae-Natural Balance Merger
Merging these companies will allow Canidae’s factory to produce for both brands simultaneously, according to D’Alessandris. This should improve fill rates across both companies.
“Natural Balance has adopted a co-packing procurement strategy,” according to Donnelly. “Co-packing will continue to play an essential part of its product offerings in dry, wet, and kibble formats.”
Natural Balance will benefit from this merger by diversifying and managing production risks, said Mr. Hoyt.
D’Alessandris explained that while both brands fall within the premium pet specialty space, there may be differences in terms of retailers or channels between them and this merger could open opportunities for growth both domestically and abroad.
Canidae not only produces their own pet food, but they also grow some ingredients through an arrangement with a farm in Kansas. Natural Balance will gain access to this source of ingredients eventually; however, the exact formulations have yet to be devised.
Integrating its supply chain has allowed Canidae to avoid the bottlenecks and shortages that have plagued other pet food companies in recent years.
Canidae maintained fill rates of over 90% last year, while many competitors fell below 50%, according to D’Alessandris. While the company faced challenges sourcing specific ingredients like lamb from New Zealand or probiotics from overseas suppliers, most everything else was readily available thanks to being controlled by Canidae itself.
Natural Balance and Canidae Pet Food Companies Are Merging According to a press release:
Natural Balance, a premium specialty pet food brand, and Canidae, a premium sustainable pet food company, have entered a definitive merger agreement that will bring both companies together into one. This consolidation unites two specialty pet food brands with complementary yet differentiated offerings to drive innovation and growth for pet parents everywhere. No details regarding this transaction were disclosed.
Natural Balance has provided its pet-food customers with premium, protein-forward ingredients for over three decades – this includes both pet food and treats for dogs and cats alike. Meanwhile, Canidae was established 25 years ago, offering both dog and cat food products with an emphasis on goodness for pets while respecting both nature and sustainability through regenerative agriculture practices and eco-friendly operations.
This merger will leverage both companies’ shared commitment to improving pet welfare through simple nutrition, responsibly-sourced ingredients and protein-rich products. Canidae will bring Pure, Goodness and All Life Stages offerings from Canidae while Natural Balance brings its Limited Ingredient (LI) and Original Ultra product lines for Natural Balance products to their joint portfolio of offerings.
History of Natural Balance and Canidae and Investors Under this transaction, L Catterton, a global consumer-focused investment firm and majority shareholder of Canidae, and Nexus Capital Management, an alternative asset investment company and majority owner of Natural Balance respectively, are contributing new growth capital in order to support both integration and expansion plans of their new combined company.
Natural Balance Pet Food Company was first founded by actor Dick Van Patten in 1989 and has undergone multiple ownership changes over its 25-year existence, first merging with Del Monte Pet Products (then Big Heart Pet Products) before being acquired by J.M. Smucker and sold later that year to Nexus Capital Management (which later sold the business back). Natural Balance had annual revenues of US$264 Million according to Top Pet Food Companies Database in 2021.
Canidae launched its pet food ingredient growing operation in Kansas in 2021. Due to being privately held, Canidae’s annual revenues are unknown according to Top Pet Food Companies Database; however two facilities were located within Kansas state with over 125 employees reported by 2021.
“Both Canidae and Natural Balance have rich legacies, strong brand recognition and consumer preferences; our merger will enable us to leverage each company’s individual strengths,” according to Andrew Taub and Matt Lischick of L Catterton Partners. As one company, “we will be able to streamline manufacturing capabilities, invest in product innovation and strengthen partnerships with key pet retailers,” they concluded.
“Natural Balance has earned its place at the forefront of premium pet food manufacturing, and we believe Canidae will provide an ideal platform to strengthen and accelerate its strategic expansion over the past two years as a stand-alone business,” according to Damian Giangiacomo and Jonathan Whitlock from Nexus Capital respectively. Together, we will produce high-quality products featuring limited ingredient formulas at scale with increased staff expertise.