Houlihan Lokey Advises Natural Balance Pet Foods

Houlihan Lokey’s Consumer, Food & Retail Group is pleased to announce that Natural Balance Pet Foods, Inc., a portfolio company of Nexus Capital Management LP, has merged with Canidae LLC, a portfolio company of L Catterton, establishing a new leading specialty pet food platform. This deal represents another successful transaction for Houlihan Lokey in the Consumer, Food & Retail space. The transaction closed on 14 April 2023.

Natural Balance, a leading premium specialty pet food brand, and Canidae, a premium, sustainable pet food company, announced that they have entered into a definitive merger agreement under which the companies will combine. The combination unites two renowned 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.

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.

Natural Balance is a leading premium pet food brand specializing in high-quality dog and cat food products sold exclusively through the pet specialty and ecommerce channels. Natural Balance has a 30+ year history in premium formulations and was a pioneer of limited ingredient diets.

From the first truckload of food delivered to the latest batch of pet food cooked in their Pet Nutrition plant in Brownwood, Texas, Canidae's story is one to be proud of. Canidae® was founded in 1996 by two pet owners who knew they could make pet food better. Better nutrients. Better flavor. Better for our dogs and cats and better for us all. They've been committed to quality ever since. That commitment is upheld today in more than just their nutrient-rich, premium pet food. It inspires everything they do, from the land they harvest and the farmers they work with, to the people they employ and the local pet food stores they partner with. All of Canidae's products are vet-reviewed high-quality and perfectly balanced for optimal health at an affordable price point with no fillers, artificial flavors or artificial preservatives. Canidae is partnering with US farmers and green technology companies to bring new, sustainable practices to pet food including lowering pesticide use, reducing runoff and adopting regenerative farming practices.

Nexus is an alternative asset investment management company based in Los Angeles, California that was founded in 2013. Nexus employs a flexible investment mandate that focuses on long-term value creation by partnering with leading management teams and businesses. Nexus invests across the consumer, education, business services and industrials sectors. The firm prides itself on being a flexible, creative investor and a reliable, transparent partner to companies and management teams.

L Catterton is a market-leading consumer-focused investment firm, managing more than $33 billion of capital across three multi-product platforms: private equity, credit, and real estate. Leveraging deep category insight, operational excellence, and a broad network of strategic relationships, L Catterton’s team of more than 200 investment and operating professionals across 17 offices partners with management teams to drive differentiated value creation across its portfolio. Founded in 1989, the firm has made over 250 investments in some of the world’s most iconic consumer brands.

Houlihan Lokey served as the exclusive financial advisor to Natural Balance and assisted in structuring and negotiating the transaction on their behalf.