Investment firm to acquire Thorne shares in $680 million deal

Hank Schultz, Senior Editor

August 29, 2023

4 Min Read
M&A activity has slowed in the industry recently.

A private equity firm will acquire supplement manufacturer Thorne HealthTech Inc.’s outstanding shares in a deal valued at $680 million, the companies announced on Monday, Aug. 28.

The deal requires shareholder approval. The total acquisition price is based on a price of $10.20 a share. That represents a 94% premium to the unaffected closing share price on July 20, 2023, and a 113% premium to the 30-day volume weighted average price as of the unaffected date of July 20, 2023, according to the press release announcing the deal.

To put that into a longer perspective, Thorne went public in late September 2021, at which time the company’s shares were trading at about $8.34 a share. 

Thorne said the transaction is expected to be completed in the fourth quarter of 2023, subject to customary closing conditions, including satisfaction of the minimum tender condition and receipt of regulatory approvals.

The offer was made by L Catterton, which is billed as “a leading global consumer-focused investment firm.”

L Catterton is a 30-year-old investment fund based in Greenwich, Conn., holding more than $30 billion in investments in a variety of consumer goods and services.

The firm’s portfolio of companies in which it holds majority or minority positions include others at the intersection of nutrition, medicine and lifestyle interventions such as Tally Health, a biotech firm founded by Harvard anti-aging supplement researcher Dr. David Sinclair, Ph.D. Another example includes L Catterton’s 2013 investment in X2 Performance, which has a line of energy drinks and workout supplements.

"This transaction is an excellent outcome for all of our stakeholders and marks the beginning of an exciting new chapter for Thorne," said Paul Jacobson, chairman and CEO of Thorne. "For over a decade, we have worked tirelessly to deliver on our mission to bring science-based solutions to the prevention space and empower consumers to live healthier lives longer.”

Management team transformed company

For many years, Thorne concentrated on formulating supplements for the practitioner channel. In recent years, the company has added a direct-to-consumer channel and broadened its offerings to include at-home health test kits, health apps and medical devices.

At one time, Thorne Research (as it was known then) was based in Sandpoint, Idaho. In 2016, the company announced plans to move to a new manufacturing facility in South Carolina. The 272,000-square-foot facility near Charleston was completed in 2018.

Thorne earlier this month reported its second-quarter results. The company brought in $72.6 million in net sales, compared to $55.6 million for the same period a year previously. And Thorne raised its full-year outlook for net sales to $285 million to $290 million.

M&A activity has slowed recently

The deal comes at a time when M&A activity within the nutrition industry has hit a wall, which some observers are likening to the mini-ice age of late 2008 and into 2009.

According to Nutrition Capital Network data, through June of this year, there were 499 transactions within the industry—from early-stage financings to M&A activity.
By comparison, there were 699 and 641 transactions during the first six months of the year in each of the prior two years.

The slowdown began in the second quarter of 2022 and accelerated into 2023, the Nutrition Capital Network data showed.

Consultant:  Deal is good news for industry

Marc Brush, an industry consultant and former editor of Nutrition Business Journal, said while the deal might not represent a “strike-it-rich" moment for some shareholders, it is a good sign in a very tough market.
“L Catterton knows this industry. They are also quite large and have been at this for a while,” Brush told Natural Products Insider in an interview. “I wouldn’t bet against them.”

“I would say the same about Thorne. Paul Jacobsen and his team have spent about 10 years repositioning the company,” he added.

Brush said that even with the dim M&A picture, the industry scuttlebutt is there is plenty of “dry powder,” or capital that private equity fund managers need to put to work.

“This is good news for the industry because it’s activity,” Brush said. “Markets have frozen up lately and to see a deal that gets pushed over the finish line is a good thing.”

“It’s encouraging that the multiple is more than two times sales,” the industry consultant added. “In recent months, investors were seeing some deals shopped at multiples even below one times sales. I would take that as an encouraging sign that we’re stabilizing.”­

About the Author(s)

Hank Schultz

Senior Editor, Informa

Hank Schultz has been the senior editor of Natural Products Insider since early 2023. He can be reached at [email protected]

Prior to joining the Informa team, he was an editor at NutraIngredients-USA, a William Reed Business Media publication.

His approach to industry journalism was formed via a long career in the daily newspaper field. After graduating from the University of Wisconsin with degrees in journalism and German, Hank was an editor at the Tempe Daily News in Arizona. He followed that with a long stint working at the Rocky Mountain News, a now defunct daily newspaper in Denver, where he rose to be one of the city editors. The newspaper won two Pulitzer Prizes during his time there.

The changing landscape of the newspaper industry led him to explore other career paths. He began his career in the natural products industry more than a decade ago at New Hope Natural Media, which was then part of Penton and now is an Informa brand. Hank formed friendships and partnerships within the industry that still inform his work to this day, which helps him to bring an insider’s perspective, tempered with an objective journalist’s sensibility, to his in-depth reporting.

Harkening back to his newspaper days, Hank considers the readers to be the primary stakeholders whose needs must be met. Report the news quickly, comprehensively and above all, fairly, and readership and sponsorships will follow.

In 2015, Hank was recognized by the American Herbal Products Association with a Special Award for Journalistic Excellence.

When he’s not reporting on the supplement industry, Hank enjoys many outside pursuits. Those include long distance bicycle touring, mountain climbing, sailing, kayaking and fishing. Less strenuous pastimes include travel, reading (novels and nonfiction), studying German, noodling on a harmonica, sketching and a daily dose of word puzzles in The New York Times.

Last but far from least, Hank is a lifelong fan and part owner of the Green Bay Packers.

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