Neogen acquires two companies from United Agri Products

November 24, 2003

CONTACT: Richard R Current, Vice President & CFO, 517-372-9200

LANSING, Mich., Nov. 24, 2003 — Neogen Corporation (Nasdaq: NEOG) has acquired Hacco, Inc., and Hess & Clark, Inc., both wholly-owned companies of United Agri Products, a subsidiary of ConAgra Foods, Inc.

Hacco, a manufacturer of rodenticides, had revenues of approximately $8 million in its most recently completed fiscal year. With the acquisition, Neogen acquires Hacco’s 80,000 square foot production facility in Randolph, Wisc., approximately 40 miles northeast of Madison. Neogen plans to continue Hacco’s Randolph operations.

Ashland, Ohio-based Hess & Clark’s primary products are disinfectants to rid pathogenic organisms from animal production and food processing facilities, and proprietary antibacterials for animals. In its previous fiscal year, Hess & Clark’s annual revenues for these products were approximately $2 million. No employees or facilities are involved in Neogen’s acquisition of this company. Hess & Clark’s operations will be incorporated into Neogen’s existing Lexington, Ky., and new Randolph operations.

In exchange for the two companies, Neogen will pay ConAgra approximately $12 million, including the assumption of certain liabilities. Neogen financed the acquisitions using a combination of existing cash and bank borrowings.

“We are very pleased to add companies with such excellent reputations to Neogen Corporation,” said James Herbert, Neogen’s president. “These companies represent strong synergistic fits to Neogen’s overall strategy of providing food and animal safety solutions.

“Rodent-borne disease and contamination remain substantial threats to the safety and quality of food from inside the farm gate until it reaches the dinner table,” Herbert continued. “Rodents are well-known vectors of disease in livestock, especially chickens and swine, and cause significant losses of food, both through ingestion, and fouling with their hair and waste.”

Hacco specializes in contract and private label formulation and packaging of rodenticides. The company is a supplier to most of the rodenticide industry, including such leading products as Ramik®, Havoc® and Prozap®. Current industry estimates place the total rodenticide market in the United States alone at approximately $300 million.

The substantial threat that rodents continue to pose to food and animal safety has been extensively documented. Even today, experts estimate that between 20% and 33% of the world’s food supply is lost to rodents before it can be consumed by humans. This loss is directly through consumption by rodents, and more significantly, through the fouling of food products with their hair and waste excretion. Rodents have been linked with the spread of dozens of devastating human diseases, including typhus, cholera and plague. Rats have been referred to as “disease elevators” because they carry pathogens from sewers and garbage collection areas into contact with humans.

Rodents pose similar threats to the health of livestock, and the financial viability of the livestock industry. Numerous livestock and poultry disease outbreaks, such as salmonellosis, have been linked to rodents, costing the industry millions of dollars. Purdue University has estimated that more than $100 million is lost by hog producers in the United States alone to the effects of Salmonella. As with food, rodents are responsible for substantial animal feed losses directly through consumption, and more significantly, through contamination. These feed losses are particularly significant with pig producers, who estimate that up to 75% of their cost of production is the cost of feed. Similarly, chicken producers face substantial losses due to the deleterious effects of mice and rats.

“For more than 20 years, Neogen Corporation has been working closely with food companies and livestock producers to produce the safest products possible, of the highest quality,” said Lon Bohannon, Neogen’s chief operating officer. “We know the markets served by these companies—we’ve been working in them since our founding. We have the market expertise, and existing marketing organization, to make the additions of both Hacco and Hess & Clark immediately accretive to Neogen’s top and bottom lines.”

Neogen Corporation develops and markets products dedicated to food and animal safety. The Company’s Food Safety Division markets dehydrated culture media, and diagnostic test kits to detect foodborne bacteria, natural toxins, genetic modifications, food allergens, drug residues, plant diseases and sanitation concerns. Neogen’s Animal Safety Division markets a complete line of diagnostics, veterinary instruments, veterinary pharmaceuticals and nutritional supplements.

Certain portions of this news release that do not relate to historical financial information constitute forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties. Actual future results and trends may differ materially from historical results or those expected depending on a variety of factors listed in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s most recently filed Form 10-K.


Category: Acquisitions