Balchem's stock up on Sensory buy

NEW HAMPTON — Balchem's stock soared nearly 23 percent Tuesday, following the company's announcement Monday that it will buy SensoryEffects, a St. Louis supplier of customized food and beverage ingredient systems, for $567 million in cash.

SensoryEffects' products are used to enhance foods' and beverages' sensory properties, such as taste, texture, aroma and color, in order to make them more desirable to consumers. The company also comes up with ice cream and frozen yogurt flavors, like Pub Crawl Artisanal Stout, according to its website.

SensoryEffects will merge with Balchem's Food, Pharma & Nutrition division, said Balchem CEO Dino Rossi in a telephone interview Tuesday.

Balchem's food division sells encapsulated ingredients, like tiny grains of copper for vitamins, and choline for human consumption, a common ingredient in infant formula.

The acquisition will accelerate growth of the division and increase sales of Balchem's main product, choline, Rossi said.

Balchem plans to add its products to the ingredient mixes SensoryEffects sells, Rossi said. The move opens up new avenues for Balchem to market choline, and allows the company to sell it as part of a blend, rather than as a stand-alone add-in, he said.

Revenue in Balchem's Food, Pharma & Nutrition division totaled $47.6 million last year, according to the company's annual report. Sales in the division increased nearly 8 percent in 2013 from 2012.

SensoryEffects' projected revenue for 2014 is $260 million, according to a news release on the deal.

The two companies only have 40 customers that overlap, so they plan to cross-sell their products, further adding to growth opportunities, Rossi said.

SensoryEffects' growth has come through acquisitions, a strategy Balchem plans to continue, he added.

SensoryEffects has more than 400 employees and six manufacturing plants across the country. Balchem also has a number of plants across the country, and one in Italy.

As of Jan. 31, Balchem had close to 400 employees, about 125 of whom work at its headquarters in New Hampton and a plant in Slate Hill.

Balchem's common stock (NYSE: BCPC) closed Tuesday at $63.98 a share, up $11.86.

jdinapoli@th-record.com