NEXGEL (NASDAQ:NXGL) has dealt into in a new joint venture with CG Laboratories Inc, one of its largest customers, in a converting and packaging business.
The producer of high-water-content hydrogel products has had a business relationship with CG Labs, a medical devices and services company, for over 15 years and the newly constructed 50:50 joint venture company CG Converting and Packaging LLC is expected to benefit from new opportunities and synergies.
“We are excited to announce this strategic opportunity with one of our largest and long-standing customers,” NEXGEL (NASDAQ:NXGL) chief executive Adam Levy said in a statement.
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“This transaction immediately increases capacity, improves margins and streamlines our supply chain.
“There are also significant synergies between the two operations, allowing for the onboarding of potential finished goods customers that in the past were not large enough to be practical for CG Labs or might be too large for NEXGEL (NASDAQ:NXGL) to on board alone, as well as combined marketing and customer outreach.”
Russell Crum, CG Labs chief executive, meanwhile, added: “After many years of operating a successful and profitable small business, it made strategic sense for our company to partner with NEXGEL (NASDAQ:NXGL), whom we have had a trusting, long-standing relationship with.
“There are excellent synergies between our two companies that will allow us each to accelerate the growth of our businesses.”
NEXGEL will invest US$500,000 into the joint venture company to fund equipment and facility upgrades as well as general corporate purposes.
CG Labs will continue to operate its medical device decontamination/disinfection and laboratory services business separately from the joint venture.