Biotech firm TCI Co (大江生醫) on Monday announced that it is forming a manufacturing partnership with NewAge Inc, a US health products company.
Under a memorandum of understanding (MOU) signed by the two firms, NewAge would sell its 50,000m2 manufacturing facility and office in Utah to TCI, which would use it as its US headquarters, the company said in a statement.
The facility would allow TCI to serve its US clients more efficiently, it said, adding that it would take over production as early as the fourth quarter.
TCI would provide NewAge with a combination of US$3.5 million in cash and a share of the facility’s revenue over the next five years, NewAge said in a news release.
The partnership between the two companies is subject to further negotiation, NewAge added.
“This is a great deal for both TCI and NewAge, and we expect this to be just the beginning of a long-term, very successful partnership,” NewAge senior vice president of operations Phil Lewis said in the news release.
“TCI brings incredible technology and manufacturing expertise to the venture, enabling NewAge to focus on leveraging its sales and marketing capabilities, and global distribution network,” he said.
TCI, which is listed on the Taiwan Stock Exchange, develops and produces health supplements, beverages and skincare products.
The company reported that revenue in the first half of the year increased 6.83 percent year-on-year to NT$4.29 billion (US$153.23 million), while earnings per share were NT$3.25 in the first quarter, up from NT$3.13 a year earlier.
Capital Investment Management Corp (群益投顧) said that the deal reflected TCI’s intention to increase its presence in the global health food market, as its revenue in Europe and the US has risen yearly.
“With the large and stable growth taking place in the US health food market, TCI originally planned to build a factory in the US. However, given the US’ strict environmental and fire regulations ... the company changed its strategy and decided to acquire NewAge’s manufacturing facility instead,” Capital Investment said in a note.
The MOU would also allow TCI to benefit from NewAge’s global sales network and 400,000 exclusive distributors, Capital Investment said, adding that it has a positive outlook regarding the company’s diversified business and resource integration.
TCI shares yesterday fell 1.55 percent to close at NT$254.5 in Taipei trading.