US consumer products business Starco Brands is looking to acquire its contract manufacturer The Starco Group (TSG).
Starco Brands yesterday (29 July) announced a "non-binding, exclusive letter of intent" to buy TSG.
Concurrently, Starco Brands, which markets meal-replacement brand Soylent and Winona Pure cooking sprays, announced a rejig of its operations.
In a statement, the company said the revamp and the planned acquisition of TSG would be a “significant milestone as it continues to further its scale, R&D, product offerings and vertical integration”.
Under the proposed transaction, Starco Brands will be renamed Starco and create two main operating subsidiaries: Starco Brands and Starco Manufacturing. Each will operate as separate business units under the public Starco umbrella, which will continue to be led by chairman and CEO Ross Sklar.
"I founded The Starco Group as a diversified chemical manufacturer in 2015 as a result of multiple synergistic acquisitions with a technical focus in aerosol and liquid fill," Sklar, who also founded TSG, added.
We later incepted Starco Brands, with the vision to grow STCB’s portfolio of brands until scale was achieved, at which point we would look to merge in TSG’s manufacturing platform under a Starco umbrella.”
The moves are also an “extremely protective step” in securing the ownership of a “significant portion” of its supply chain, Starco Brands said in its statement. It hopes the changes will expand margins and add another revenue stream from private label.
TSG, which was set up in 2015 as a diversified chemical manufacturer, operates three facilities across the US, focusing on food, beverage, personal care and household products.
It provides private label and co-packing services for third-party and retailer-owned brands.
TSG's facilities are Four Star Chemical in Los Angeles, BOV Solutions in Statesville, and Temperance Distilling in Temperance.
In 2024, Starco Brands generated net revenue of $58.7m, down 7.7% from 2023, due to stock shortages.
The company reported an unadjusted net loss of $17.3m, an improvement from the $46.4m loss it posted in 2023.
