Exclusive Interview

'A perfect fit': Life-Space probiotics boss on $690m acquisition by By-Health

06-Feb-2018 - Last updated on 12-Feb-2018 at 06:47 GMT

Life-Space has had huge e-commerce success in China.

"This wasn't a hostile takeover, there will be no dilution of what we do…in fact, most people won't be able to tell the difference," was how Life-Space boss Ben McHarg coolly summed up the second biggest ever Chinese acquisition of an Australian supplement firm.

Life-Space is one of the largest probiotics companies in Australia. It operates the Evolution Health and Ultramix businesses, and owns Life-Space, the market leading probiotic brand sold in China and Australia.

Speaking exclusively to NutraIngredients-Asia from Guangzhou just days after it was confirmed that Chinese giant By-Health was to buy the privately-owned company for $690m, managing director McHarg was keen to point out it was "business as usual".

"We will continue doing exactly what we've been doing for the last few years," he added. "The management will be the same, the staff will be the same, and both myself and Craig (Sibley, Evolution Health CEO) will be staying on."

"It really is a business as usual approach, alongside the synergies for both sides."

Domestic strength

Indeed, while Life-Space has had huge success in China through cross border e-commerce sales in recent years, the Shanghai stock exchange-listed By-Health is better known for its offline acumen.

By-Health's supplements are available in around 100,000 Chinese pharmacies, 20,000 mom-and-pop stores, and 10,000 supermarkets.

McHarg said Life-Space had always envisaged entering the offline space in China, but added that it hadn't been a top priority due to its online strength.

"Now we will be able to tap into the distribution network," he added. "In turn, By-Health, which is huge in China, does not have a global presence. With Life-Space, they will have a better chance of breaking through."

"For us, it was crucial to find someone who understood, and was respected in, the China market. We knew that if we wanted to keep expanding, we had to transition out of the family structure to something bigger and with scale."

Amazing facilities

Life-Space will now embark on fulfilling its expansion strategy, which McHarg outlined at our Probiota Asia summit in Singapore last October.

Market entry into Hong Kong is on the cards this calendar year, while plans are also afoot to break into Vietnam. Italy will then be the next target.

The firm will continue to develop its own new products and manufacture in Australia, but will also be able to take advantage of By-Health's "amazing facilities" in China, including conducting more clinical testing.

"There can be some negative perceptions about the industry in China,” added McHarg, "but that really shouldn't be the case. People who say this should take a look at the facilities that By-Health has, because I have never seen anything like it."

Back at Life-Space's Melbourne HQ, McHarg intend to strengthen the innovation and R&D team, adding that a new stream of products are in the pipeline.

"We are targeting new functions, with specific applications in some new categories," he added. "We are not too far away."

The $690m deal has a few regulatory and shareholder hurdles to clear, but neither side sees there being any problems.

Once the deal is complete, it will be the second largest in history for an Australian supplement firm, after Biostime's $1.6bn takeover of Swisse.