WAUWATOSA - A 4-year-old biotech company that's a player in the booming healthy food movement has been sold for up to $100 million to the parent company of Arm & Hammer.
Agro BioSciences Inc., the largest tenant at the Milwaukee County Research Park business incubator, was acquired by Church & Dwight Co. Inc. for $75 million plus up to $25 million more based on business performance.
It's one of the largest "exits" for a local startup in years — not bad for a company that was founded in 2013 with a handful of employees and that has already outgrown its Research Park offices.
Agro BioSciences' founders and investors literally made millions from chicken feed. The company specializes in "healthy guts," specifically the innards of poultry, swine and dairy cattle. It analyzes the ability of the animals to digest their feed and then offers natural feed additives that can help improve the animals' health.
In doing so, it lets farmers avoid using antibiotics, giving the food industry a powerful product marketing tool: a "No Antibiotics Ever" label, said Tom Rehberger, the microbiologist who co-founded and is president of Agro BioSciences.
"Those are triggers for these customers," he said, noting that some consumers will think nothing about spending $10 for a "natural" burrito rather than conventional, and cheaper, fast food.
"We're in that space," he said.
Rehberger uses the language of the wine industry to help describe what his company does. Various types of wine are tied to the "terroir," meaning the part of the world, the soil and weather conditions where the wine is produced. Agro BioSciences focuses on "microbial terroir," referring to the environments that farm animals are raised in and the effect they have on animal health and nutrition.
Agro BioSciences is "an innovator and leader in developing custom probiotic products for poultry, cattle and swine," Church & Dwight said in its quarterly earnings report released Thursday. "The business is expected to grow rapidly to meet the growing demand for probiotic products to maintain the health and productivity of animals in an antibiotic free environment."
New Jersey-based Church & Dwight has annual revenue of $3.5 billion, and its animal productivity business has sales of about $11 million. Among its consumer brands are Arm & Hammer, OxiClean and OrangeGlo.
This is the second startup to be launched and sold by Rehberger, a Wauwatosa native who returned to his hometown after earning a doctorate at Iowa State University. He served 15 years as the cross country coach at Wauwatosa East High School.
Agro BioSciences is an outgrowth of a company previously founded and sold by Rehberger: Agtech Products, a Pewaukee-based microbial sciences company, was acquired in 2006 by Denmark's Danisco A/S. That company, in turn, was acquired by DuPont in 2011.
The new parent company wasn't as interested in the feed additives business, so Rehberger took it and built it into the company he sold this week.
"This is exactly the sort of virtuous cycle we need to celebrate and repeat," said Kathleen Gallagher, executive director of the Milwaukee Institute. "Following the acquisition of their company, an entrepreneurial team went out and built a new one that attracted a national firm to our region. We're excited to see the entrepreneurial efforts that spring from this event."
With its broad market, Church & Dwight gives the small Wauwatosa company the ability to reach and help improve milk production at 60,000 dairy farms in the United States, Rehberger said. "Today, you can't find a better company within the dairy industry."
Rehberger said the resources available at the Research Park, including crucial laboratory equipment on site, made it easier for him to grow the company. That equipment includes an autoclave sterilizer and special water filtration systems, said Elissa Coyer, director of marketing.
"The ability of us to move right into this space was critical," Rehberger said. "We saved a ton of money."
The company is the largest tenant in the innovation center, with about 10,000 square feet, said Guy Mascari, executive director of the Research Park.
"We've had comparable success stories over the years, but this is about as good as you get," he said.
That rapid growth, however, means Agro BioSciences has maxed out the space available and will soon move to offices and a lab about twice as large in the Town of Pewaukee. The relocation is unrelated to the sale to Church & Dwight, company officials said.
Mascari and Rehberger said it's especially satisfying to see a startup prosper in the areas of food and agriculture, critical parts of the state's economy.
This might not be the last business success tied to Rehberger.
A spin-off company, Third Wave Bioactives, will remain with a handful of employees in a smaller space at the innovation center. It's looking into using natural organisms to improve the nutrition and shelf life of products such as hummus, sauces, cheese and pesto, Rehberger said.
"They're trying to do the magic again," Mascari said.