Numico Sells GNC
ZOETERMEER, The NetherlandsNumico
is closing the doors on its U.S. operations, as it reached an agreement to sell
its final U.S. companyGeneral Nutrition Centers Inc. (GNC)for $750
million. While the division has been on probation, industry expected
Numico to sell GNC following its divestures of Rexall Sundown and Unicity
earlier this year.
Under terms of the agreement, Apollo Management LP, a New
York-based investment firm, will pay $750 million for GNC, subject to Numico
shareholder approval and an OK from regulatory authorities. Following the sale, Numico will liquidate its U.S. operations
and anticipates a fiscal loss of approximately $1.3 billion. In addition, Numico
will retain liability related to ephedra products; GNC discontinued sales of
ephedra-based supplements in June 2003.
We are convinced that selling GNC now, and thereby
returning Numico to its core competencies, will maximize shareholder value as we
will create a high-growth, high-margin, specialized nutrition company based on
two very strong and vibrant businesses, said Jan Bennink, chief executive
officer (CEO) of Numico (www.numico.com). Numico will still have operations in
the baby food and clinical nutrition arenas.
Numico originally purchased GNC in August 1999 for $2.5
billion; after years of poor sales, the business was put on the block
earlier this year. Numico has been reviewing offers since May, and winnowed the
field to three final bids in mid-September. Reportedly, Apollo beat out NBTY,
which purchased the European GNC operations in February, and the investment firm
of J.W. Childs, which has two former GNC execs including former CEO William
Wattsamong its partners.
GNC had been expected to sell at a depressed valuation, given
its position as a turnaround business opportunity. GNC posted sales of 625
million euros ($727 million) in the first half of 2003, which Numico noted was
an increase if ephedra product sales from that period were excluded from the
equation.
Numico also announced its exit from the European nutritional
supplements market. It will sell Vitamex AB, based in Norrkping, Sweden, to
the Swedish firm Wilh. Sonesson AB for 31 million euros ($36 million). We
view the sale of Vitamex as the last important withdrawal from the European
nutritional supplements market, Bennink said. Vitamex manufactures dietary supplements sold
through retail and mail order operations.