Neptune Wellness Solutions Inc. (Neptune)[NASDAQ: NEPT], a Canada-based consumer-packaged-goods company, is readying its Australia-based organic baby food and toddler brand, Sprout Organics, for an IPO next year, president and chief executive officer Michael Cammarata told this news service.

The split of Sprout Organics is still subject to shareholder consent and the parent company is eyeing add-ons to complement the unit ahead of any IPO.

Targets should have a revenue range of USD 10m to USD 17m and are either edging close to breakeven or already profitable, he said. There are plenty of potential targets across North America and Europe with several sponsors sitting on brands they want to exit, which could be ideal targets for platform plays, he added.

Neptune wants to grow Sprout as a platform moving from baby food and toddler brands to producing products for the whole family; the right brands would help it grow more quickly, said Cammarata.

A listing on the NASDAQ or New York Stock Exchange is likely, but details will be ironed out in January, he said. The company plans to pick a syndicate of global coordinators and joint bookrunners in the first quarters of 2024 through a competitive selection process, with a deal likely to happen before the end of the next year.

Greenberg Traurig is acting as its main legal counsel on bureaucratic preparation, he said.

Wider M&A

Acquisitions are also a core strategic focus for the wider business, the CEO noted. The company announced on 20 November that it had entered a non-binding Letter of Intent (LoI) to acquire Datasys Group, a Warwick, RI-based data, analytics, and digital media solutions provider. The total consideration is USD 112m.

The Datalysis acquisition is part of a build-up plan for further acquisitions in artificial intelligence and data. This deal is an example of the type of acquisition Neptune is looking for to power its Biodroga division and enhance its offering when it comes to next generation AI, Cammarata said.

He added that targets should be profitable and have a well-developed core customer base; the company is primarily focusing on M&A in North America.

Neptune will consider a capital raise if needed to implement its growth strategy deriving from a recent strategic review, as well as looking for new long-term shareholders to back the growth of its units, the CEO added.

It is unlikely that any deal would lead to Neptune being taken private as “a lot of institutional investors want us to stay public,” Cammarata said.

The strategic review, which saw the company transition out of its original cannabis business, helped identify the right directions for the company and implement changes that will result in the “right structure” to support the business, optimise profitability of all subsidiaries, and ensure growth, he added.

Neptune (formerly known as Neptune Technologies and Bioresources) was founded in 1998 and headquartered in Laval, Quebec with a United States headquarters in Jupiter, Florida.