Nestlé to acquire “core” brands of US vitamin and supplement maker The Bountiful Company for $ 5.75 billion after revealing earlier in the week that it was in talks with private equity firm KKR to buy all or part of the business.
The deal includes the brands Bountiful Nature’s Bounty, Solgar, Osteo Bi-Flex and Puritan’s Pride, described as “high growth” lines by Nestlé in a statement this morning (April 30), while the world’s largest food company will also acquire the United States’ private label business in the country.
The sports and active nutrition brands of Bountiful Pure Protein, Body Fortress and MET-Rx, as well as Dr. Organic and the Company’s Canadian over-the-counter activities, are not included in the transaction as they do not “complement the Nestlé Health Science portfolio, ”said Nestlé.
The brands acquired will be alongside Atrium Innovations in the Health Sciences portfolio, a Canadian group of vitamins and supplements that maker KitKat purchased in 2017.
Nestlé said the deal with KKR is expected to be finalized in the second half of this year, subject to regulatory approvals.
Greg Behar, CEO of Nestlé Health Science, said: “This acquisition complements our existing health and nutrition portfolio in terms of brands and channels. It will make Nestlé Health Science the industry leader in mass distribution, specialty retail, direct-to-consumer e-commerce in the United States, while providing significant opportunities for geographic growth. Vitamins and supplements are a key part of our business and have contributed to a strong acceleration of growth.
Based in Long Island New York, Bountiful has been led by CEO Paul Sturman since 2017. The company was originally founded as Nature’s Bounty in 1971 before being renamed by KKR in partnership with Sturman in 2017.
Bountiful has manufacturing, packaging, distribution and warehousing facilities in the United States, Canada and the United Kingdom, according to its website. It also “maintains overseas offices” in China, Spain, South Africa and New Zealand.
A Nestlé spokesperson clarified that the acquisition includes eight manufacturing plants in the United States and that KKR remains the majority owner of Bountiful, while The Carlyle Group retains “small ownership”.
KKR confirmed in a separate statement that it acquired a majority stake in Bountiful in 2017 from Carlyle, which retains a minority stake and “is participating in the sale alongside KKR”.
“We are delighted to have partnered with the management team and KKR in this chapter of The Bountiful Company’s growth and we are delighted to see the company continue its journey with Nestlé,” said Jay Sammons, Global Manager of Carlyle Consumer, Media and Retail. team.
Meanwhile, Pascal Boll, analyst at US investment banking and financial services firm Stifel, wrote this morning in a research note: “We believe the transaction makes strategic sense and places Nestlé strongly on a strong growth market, which, combined with equity gains, should lead to above-average organic growth for Nestlé. The transaction multiples are reasonable. ”
Nestlé said the acquired brands generated net sales in the year ended March 31 of $ 1.87 billion and an EBITDA margin of 18.3%. “This EBITDA will be negatively affected by one-time integration costs, which will have a slightly dilutive effect on Nestlé’s underlying trading operating margin in 2021.” He added: “The margin is expected to increase above the Nestlé group average once synergies are fully implemented by 2024.”
Sturman, who is also President of Bountiful, said: “Today’s announcement from Nestlé Health Science recognizes the transformation of The Bountiful Company over the past three years and more, as well as the collective value and capabilities of the organization. We are incredibly proud of the trusted brands we have built and believe they will be great assets for Nestlé. ”
Nate Taylor, Partner and Co-Head of the Americas at KKR, added: “Paul and the entire team at The Bountiful Company have built a global portfolio of brands positioned for sustained growth, with a strong culture of innovation, accountability. and rhythm. We know The Bountiful Company will add value to Nestlé and continue to improve the health of the millions of consumers who use its products every day.