NBTY Bids Highest to Buy Leiner

RONKONKOMA, N.Y.—NBTY (NASDAQ:NTY) won a June 9 auction to acquire Leiner Health Products, the Carson, Calif.-based private label manufacturer that has been under bankruptcy protection since March 10, 2008. After initially offering $230 million to acquire Leiner, other bidders forced the auction, which was won by NBTY with a bid of about $371 million plus assumption of certain liabilities.

The restated agreement to purchase Leiner, which is subject to bankruptcy court approval, provides for  a downward price adjustment if the amount of working capital at closing is greater than $110 million. NBTY expects the acquisition to close no later than September 2008.

"The Leiner acquisition reflects our ongoing efforts to better meet the needs of our customers by providing them with the highest quality service and continuous product supply," said Scott Rudolph, chairman and CEO, NBTY (NBTY.com). "We continue to seek acquisitions which will enhance our position as the worldwide leader in the nutritional supplement industry and further our ongoing efforts to generate growth and increase shareholder value."

NBTY filed a report with the Securities and Exchange Commission (SEC) on 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.

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 NorthCastle investment a tripled return.