A summary of mergers & acquisitions and investments in the nutrition, natural product, health & wellness, and green product industries.

• NCN News for August 11, 2011

Transaction Headlines
Sunsweet Purchases Function Drinks
Bone Health Ingredient Attracts Investment
New Partnership for South Beach Diet Brand
Danone Enters India’s Baby Nutrition Market
FIJI Water Acquires Second Wine Brand
Smart Balance Enters Gluten-Free Category
VOSS Bottled Water Raises $18 Million
Kraft Foods Slices Business in Two
NuVim To Take Stake in GRAN NEVADA
Skinny Nutritional Raises Expansion Financing
NuMe Health Closes Financing
Kellwood Acquires Yoga Clothing Company

Sunsweet Purchases Function Drinks
Sunsweet Growers Inc. (Yuba City, Calif.) has acquired Function Drinks (Los Angeles), a marketer of dietary supplement beverages, as part of its initiative to build a portfolio of emerging beverage brands. Function Drinks’ core products are Urban Detox, Alternative Energy, and Light Weight. In association with the transaction a wholly owned subsidiary, Disruptive Beverages Inc. (DBI), has been formed. Function Drinks was founded in 2004 by spine surgeon Dr. Alex Hughes, Josh Simon and Dayton Miller. The co-founders will stay in leadership positions. Sunsweet began seeking strategic beverage niches in FY2010, investing in Ayala’s Herbal Water and C2O Pure Coconut Water. Silverwood Partners acted as the exclusive financial advisor to Function Drinks in the transaction.

Bone Health Ingredient Attracts Investment
BioActor BV (Maastricht, Netherlands) announced that ICOS Capital, Nedermaas Ventures and Limburg Ventures have invested €2 million in a Series A financing round in which its CEO and founder also participated. Funds will be used to launch BioActor’s bone health ingredient Bonolive, which it says is clinically proven to stimulate bone-producing cells, in addition to financing clinical validation studies for other products. BioActor develops proprietary health ingredients for functional foods, medical nutrition and dietary supplements.  Bonolive will be launched in the United States this year. Other products include TensioControl for blood pressure and Naxus for glycemic control. BioActor was a presenting company at the NCN Ingredients & Technology Investor Meeting at SupplySide West.

New Partnership for South Beach Diet Brand
MidOcean Partners has acquired the South Beach Diet brand (Bonita Springs, Fla.) in partnership with the brand’s founder Dr. Arthur Agatston. MidOcean and management plan to re-launch South Beach Diet branded foods, including high protein/high fiber cereal and diet bars, in addition to products in new health and wellness food categories. The brand is also applied to a subscription website. Dr. Agatston, a preventive cardiologist, developed the diet in the mid-1990s for cardiac and diabetes patients. He wrote The South Beach Diet in 2003; a new book, The South Beach Wake-Up Call, is scheduled for release in October 2011. MidOcean has appointed its management affiliate Elise Donahue, a 30-year veteran of the consumer products industry, as CEO. In 2006, MidOcean and ACI Capital sold weight management firm Jenny Craig to Nestlé in a transaction valued at approximately $600 million. Also that year, MidOcean sold its majority stake in Vitaquest to an affiliate of CK Life Sciences in a transaction that valued Vitaquest at $345 million.

Danone Enters India’s Baby Nutrition Market
Groupe Danone (Paris) has signed an agreement with Wockhardt Group (Mumbai) to acquire its nutrition business, marking the French dairy giant’s entry into the baby nutrition and medical nutrition markets in India. The deal is valued at approximately €250 million. Wockhardt’s brands include Dexolac, Farex and Nusobee baby nutrition products and the nutritional beverage brand Protinex. In 2010 Danone had sales of €17 billion, of which half were in emerging markets. Wockhardt is a pharmaceutical and biotechnology company with annual revenues of approximately $802.8 million.

FIJI Water Acquires Second Wine Brand
FIJI Water (Los Angeles) has purchased chardonnay specialist Landmark Vineyards (Kenwood, Calif.), adding to its portfolio of wine brands. The acquisition follows FIJI Water's December 2010 acquisition of JUSTIN Vineyards and Winery.  FIJI is owned by the $2 billion agricultural conglomerate Roll Global, which also owns the Pom Wonderful pomegranate business, as well as Teleflora and Paramount Farms. Advising on behalf of Landmark Vineyards was the investment bank Demeter Group.

Smart Balance Enters Gluten-Free Category
Publicly traded Smart Balance Inc. (Paramus, N.J.), maker of heart healthy spreads, oils and other foods, has acquired Importations DE-RO-MA, which owns Glutino Food Group (Laval, Quebec), for $66.3 million in cash from the Canadian investment firm Claridge. Glutino makes premium-priced gluten-free foods sold under the Glutino and Gluten Free Pantry brands. Glutino had annual sales of $53.9 million for fiscal year ended March 31, 2011, and has increased sales approximately 30% annually for the past three years. The gluten-free category is now worth over $2 billion in retail sales, noted Smart Balance Chairman and CEO Stephen Hughes. “We are bullish on the continuation of the category's 10% compound annual growth rate due to increased awareness and diagnosis of gluten-induced ailments," he said. Smart Balance’s net sales for FY2010 were $242 million, up 1%.

VOSS Bottled Water Raises $18 Million
The Norwegian bottled water company VOSS (New York, N.Y.) has raised $18 million in strategic financing, led by new investors Juggernaut Capital Partners LP and Centra Capital AS. Funds will support the company’s growth in the United States and Norway and expansion in key international markets. VOSS, which markets artesian water from Norway packaged in distinctive tall jar-shaped bottles, was founded in Oslo in 2001.

Kraft Foods Slices Business in Two
Kraft Foods Inc. (Portland, Ore.) is planning to split into two publicly traded companies consisting of International snack brands and the North American grocery business. Kraft's grocery business generates estimated revenues of $16 billion; its snack business will have revenues of around $32 billion and will focus on fast growing international business particularly in emerging markets like China, India and Brazil. The grocery business will revolve around Kraft’s North American household name brands, which represent slower growing businesses more likely to deliver shareholder dividends. Other corporations that have recently divvied their business include Sara Lee Corp. and Ralcorp Holdings. Kraft acquired Cadbury plc 18 months ago for $18.5 billion.  

NuVim To Take Stake in Gran Nevada
NuVim Inc., (Lewes, Del.), maker of refrigerated beverages with whey protein and NutraFlora prebiotic fiber, has signed a letter of intent to take a stake in Gran Nevada Inc. (New York) and conduct its beverage operations through 2014. NuVim will share a percentage of profits with Gran Nevada. Revenues from Gran Nevada’s  ready-to-drink beverages, including its flagship product Horchata, a rice and milk beverage targeted at the Hispanic market, are projected to reach $1 million in the next 12 months. The transaction depends on NuVim raising $100,000 to help support the Gran Nevada business.

Skinny Nutritional Raises Expansion Financing
Skinny Nutritional Corp. (Bala Cynwyd, Pa.), the maker of zero calorie enhanced water, has completed two financings resulting in total proceeds of approximately $2.7 million. Funds will be used to expand the Skinny Water line of beverages. Outdoor media expert William Apfelbaum has also made a considerable investment in Skinny and will serve as a strategic consultant for the company’s national outdoor brand awareness efforts. “With the completion of this round of funding, we believe that the company has the needed capital to continue its market expansion of Skinny Water in Southern California, Chicago, Illinois, and the Southeast region including Florida,” said Skinny Nutritional’s CEO Michael Salaman.

NuMe Health Closes Financing
NuMe Health LLC (New Orleans, La.), a biotechnology company developing evidence-based prebiotics for specific health conditions, has closed a series A-1 financing round. The $675,000 financing was led by BVM Capital LLC and represents the first closing of a larger series A round. Funds will be used primarily to support corporate and product development as the company prepares to commercialize its first prebiotic products for the dietary supplement and health food markets. NuMe's prebiotics are derived from bioactive ingredients in edible plants. Unlike probiotics, which add beneficial bacteria to the GI tract, prebiotics are non-digestible ingredients that work primarily by providing the nutrition that beneficial microbes need to thrive.   

Kellwood Acquires Yoga Clothing Company
Fashion company Kellwood (Chesterfield, Mo.), an affiliated portfolio company of Sun Capital Partners Inc., has acquired Zobha (Mill Valley, Calif.), a yoga and fitness apparel and accessories company. Zobha is Kellwood’s first activewear business and its third acquisition in 2011. Founded in February 2008 by Jamie Hanna, the Zobha brand is available in 350 retail stores in 27 countries, at yoga studios and fitness clubs, and online. Other Kellwood brands include Vince, Baby Phat, and Sag Harbor. Kellwood had estimated 2010 revenue of $820 million, according to the St. Louis Business Journal’s list of top privately held companies. The formerly publicly traded company went private in 2008 when it was purchased by Sun Capital.