NBTY to acquire Solgar for $115m
Solgar for $115 million, reports Dominique Patton.
A division of Wyeth Consumer Healthcare, Solgar manufactures and distributes premium-branded multivitamins, and speciality formulas to around 5,000 health food stores across the US.
The acquisition will give NBTY, which has seen strong growth to the mass market channel, a greater presence in the speciality food market.
"It is a very exciting market. A whole bunch of companies have not dedicated themselves to supplying independent health food stores but we think there is significant opportunity there," NBTY president and chief financial officer Harvey Kamil told NutraIngredients-USA.com.
He added that the firm will set up a new unit, called Independent Health Food Stores, to take over Solgar's business in addition to the current NBTY brands American Health and Good & Natural.
A range of new products will be added to the Solgar line to inject new growth to stagnant turnover from the Bergen County, New Jersey-based firm, which generated around $105 million in 2004.
"The former parent took a more pharmaceutical approach to products and were slow to add new ones. We're going to roll out an assortment of new products," said Kamil.
The acquisition will also boost NBTY's foothold in international markets, with Solgar's presence in more than 40 different countries.
NBTY has seen its turnover swell with the purchase of Numico's ailing vitamin business Rexall in 2003, coming at the end of a major acquisition spree, which included buying up supplement activities in Europe (Numico's GNC outlets operated by the Health & Diet Group in the UK and Germany, and Ahold's De Tuinen retail chain).
Revenue in 2004 grew 39 per cent to $1.65 billion but vulnerability in the specialty retail market is putting pressure on sales from its Vitamin World division.
Business in 2005 has also been hit by negative media coverage of vitamin E, creating a "tough year for nutritional supplements", according to Kamil.
He expects business to pick up and the group will continue to gain market share. It is already the biggest supplement maker in the US.
NBTY will gain net assets of approximately $64 million from the Solgar sale, although the purchase price will be adjusted based upon the actual net assets transferred at closing, it said.
The transaction is subject to regulatory and other customary approvals and is expected to close by August 2005.
