Aug 23, 2017
By Will Anderson
The Austin company that brought a new kind of fluorescent fish to consumers has been bought by a multi-faceted consumer goods company for $50 million in cash, plus some performance-based incentives.
On May 12 Yorktown Technologies LP sold the GloFish brand and intellectual property to Spectrum Brands Holdings Inc., although details are just now coming to light because of securities reporting requirements.
The sale included $37.8 million in intangible assets such as tradenames and technology and about $600,000 in property and equipment, according to the securities documents. In addition to the $50 million upfront, Yorktown is eligible for additional payments — estimated at $4.2 million but subject to change based on how close GloFish revenue meets projections.
Spectrum Brands (NYSE: SPB), based in Madison, Wisconsin, sells items from toaster ovens to pet-stain removers. Its brands include Armor All for car care, EcoLogic for bug and weed control, Rayovac for batteries and Black+Decker for kitchen appliances. The company reported net sales of $441.1 million for the nine months ended July 2.
GloFish are the only mass-market fluorescent fish. They are sold in more than 7,000 stores nationwide, including locations of Wal-Mart Stores Inc. and PetSmart Inc. Alan Blake and Dr. Richard Crockett founded the company in 2001 in the Texas capital after licensing a process developed at the National University of Singapore to create fluorescent fish for medical research to detect environmental toxins, said Blake, who plans to help Spectrum in a transition role through the end of the year.
From that single license, Yorktown Technologies developed GloFish into the first fluorescent fish available for consumer purchase. There are now 17 product lines and four species of fish in six colors. GloFish has about 15 percent market share among aquarium fish sales, the company estimates.
Blake and Crockett were early pioneers in applying biotechnology to the retail pet sector. The widespread distribution of GloFish highlights how such tools can be deployed in a mass market; the industry is getting more crowded now, with companies such as Embark Veterinary Inc., a startup with DNA-testing kits for dogs that relocated this year from Austin to Boston.
“This sale is the culmination of a tremendous effort by so many people over the last 16 years,” said Blake, who remains CEO of Yorktown. “I feel very fortunate to have been able to lead the company through this amazing journey.”
GloFish has about 20 employees split between an administrative office in Austin and a research and development office in Florida, the state at the center of the country’s aquarium fish production. The Florida team will remain with Spectrum after the deal.
Early investors and longtime board members for Yorktown Technologies include William Cunningham, former University of Texas System chancellor, and John Butler, former director of UT-Austin’s IC2 Institute.
“As a global leader in the aquarium industry, we are confident that Spectrum Brands will be able to accelerate the strong growth that we’ve achieved in recent years with GloFish,” Crockett, who remains president of Yorktown, said in a statement.
Blake and Crockett are searching for their next opportunities, possibly remaining in the biotechnology sector. Get to know Blake through this 2006 Journal Profile, which chronicles how he rebounded from a failed dot-com venture.
Piper Jaffray acted as financial adviser, Howard Nirken of Dubois Bryant & Campbell LLP acted as legal counsel and David Parker with Parker-Highlander acted as intellectual property counsel for GloFish in the deal.
RBC Capital Markets LLC acted as financial adviser and Paul Weiss Rifkind Wharton & Garrison LLP acted as legal counsel for Spectrum Brands.
GloFish was the first of two major acquisitions this summer by Spectrum Brands. In June it purchased New Jersey-based PetMatrix LLC, maker of rawhide-free dog chews including the DreamBone and SmartBones brands, for $255.2 million.