Starco Brands to Acquire Co-Manufacturer in Push for Vertical Integration

Starco Brands has executed a letter of intent to acquire its contract manufacturers, The Starco Group (TSG), aiming to create a vertically integrated CPG platform. The proposed transaction is expected to give the combined entity greater scale in revenue and margin expansion.

As part of the deal, Starco Brands will be renamed “STARCO” and create two main operating subsidiaries, Starco Brands and Starco Manufacturing. Each will operate as a separate business under the public STARCO umbrella, which will continue to be led by founder and CEO Ross Sklar.

“We are thrilled to reach this milestone, which enables true vertical integration for many of our brands, unlocks significant synergies and is expected to expand the STARCO revenue base,” said Sklar in a statement.

Founded as a diversified chemical manufacturer in 2015, TSG was the result of “multiple synergistic acquisitions” with a focus on aerosol and liquid fill. It has since evolved into a middle market private label and co-packing manufacturer operating three facilities across the U.S. – Four Star Chemical in Los Angeles, BOV Solutions in Statesville, N.C., and Temperance Distilling in Temperance, M.I. – with a focus on personal care, household and food and beverage products.

Sklar went on to launch Starco Brands with the intent of growing its portfolio of brands until meaningful scale was achieved, at which point it would merge with TSG’s manufacturing platform. Starco Brands’ portfolio currently includes Winona Pure popcorn seasoning spray, Whipshots vodka-infused whipped cream and Soylent plant-based meal replacement shakes.

Soylent is Starco Brands’ most recent food and beverage brand addition, having been acquired in 2023. According to documents filed with the U.S. Securities and Exchange Commission (SEC), Starco agreed to issue the former holders of Soylent Preferred Stock an aggregate of over 165.3 million restricted shares of Starco’s common stock and up to 18.5 million more shares based on final “calculations of Soylent’s working capital, cash at closing, indebtedness at closing and certain unpaid transaction expenses.”

Starco Brands’ acquisition of TSG is slated to close in the fourth quarter, subject to due diligence, documentation and regulatory compliance requirements. Whipshots and Winona will both be vertically integrated through the new platform.

“[This transaction] is an extremely protective step in gaining ownership of a significant portion of [Starco Brands’] supply chain that assists in expanding its margin while layering in new recurring revenue streams from its private label business,” reads today’s announcement.