NBTY Offers to Buy Leiner Health for $230M

RONKONKOMA, N.Y.—NBTY (NASDAQ:NTY) has agreed to pay $230 million to acquire Leiner Health Products, the Carson, Calif.-based private label manufacturer that has been under bankruptcy protection since March 10, 2008. NBTY filed a report with the Securities and Exchange Commission (SEC) on Friday, May 29, detailing its plans to acquire Leiner. By Monday, June 2, word had spread on the acquisition, which RBC Capital Markets analyst Edward Aaron said could boost NBTY's profits—by as much as $0.50 per share annually. NBTY shares traded heavily, closing the day at $35.00, a 6-percent jump from before the filing.

According to NBTY management, they will factor certain liabilities into the price for the transaction, which is still subject to higher and better offers from other competitors, per Leiner's bankruptcy proceedings. In fact, NBTY reported should another such offer surface, an auction would be held June 9, thus changing the terms of NBTY's agreement to purchase Leiner. If no such other offers are filed, NBTY expects the deal to close by September, at which time the purchase price could change depending on the amount of working capital at closing time.

Leiner is co-owned by Golden State Investors and a new investment fund managed by North Castle Partners, following a recapitalization in 2004, which netted the original North Castle investment a tripled return.