Martek's Sights On Growth

January 24, 1995|By Ross Hetrick | Ross Hetrick,Sun Staff Writer

Gearing up for a possible surge in demand for its infant formula additive, Martek Biosciences Corp. of Columbia yesterday announced that it has signed a letter of intent to buy a Kentucky fermentation plant for $10 million.

The Winchester, Ky., plant, which has two 40,000-gallon fermentation tanks, will be used to make a product derived from algae and fungi, called Formulaid, which some studies show improves mental and visual development in infants.

"With this facility, Martek now possesses the capacity to meet the potential early market demand for Martek's oils for use in infant formula and other nutritional products," said Henry Linsert Jr., the company's chairman and chief executive officer, in a prepared statement.

The announcement was made after the market closed. The company's stock yesterday dropped $1.25 a share, to close at $9.25.

The deal, which is subject to further study by Martek, is expected to be completed in March.

Formulaid went on the market this fall in Belgium, sold by the Dutch company Nutricia for use with premature babies. Martek also has license agreements with two U.S. companies, Wyeth-Ayerst and Mead-Johnson, which have not yet added Formulaid to their infant formulas.

"We've got a product that is already on the market in a small way in Europe, and we think demand is going to be picking up throughout this year and into 1996," said Steve Dubin, chief financial officer of Martek.

Martek, which produced a half-ton of Formulaid last year, will be able to produce 50 tons a year at the new plant, Mr. Dubin said.

"This will get us through the next couple of years, anyway," he said.

The company, which has 70 workers, had $3 million in sales last year. It has not made a profit since being founded in 1985.

Under the tentative agreement, Martek will pay the plant's owner, Golden Technologies Co. Inc., $1 million in cash and $5 million in common stock. Martek also will sign a promissory note for $2 million, payable in two years, and another note for $2 million to be paid in 2 1/2 years.

Golden Technologies is a a wholly owned subsidiary of ACX Technologies Inc., of Golden, Colo., an industrial products company with businesses in aluminum, industrial ceramics and packaging.

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