$130 million in financing to underpin Twinlab management buyout

27-Jan-2014 - Last updated on 27-Jan-2014 at 17:53 GMT

Twinlab CEO Tom Tolworthy

Capstone Financial Group will act as advisor and help raise $130 million in financing to underpin a planned management buyout of Twinlab Corp. and attendant formation of a new entity aimed at future acquisitions.

The newly-created acquisition vehicle, Twinlab Consolidation Corp., will use approximately $106 million in net proceeds to acquire certain assets of today’s Twinlab and three strategic acquisitions.

Tolworthy’s leadership a selling point

George Schneider, president and chief investment officer of Capstone, told NutraIngredients-USA that a number of considerations went into the deal. Chief among them is the name at the head of the management team: Twinlab CEO Tom Tolworthy. His reputation for turning around companies and positioning them for future success is unparalleled, Schneider said.

Twinlab, one of the early big brand names in the dietary supplement business, had stumbled badly after its promising start. After a bankruptcy in 2003, the brand persisted but the company only started to post double digit sales growth in 2010, shortly before Tolworthy came on the scene in early 2011.

“The turnaround that Tom Tolworthy and his team have accomplished is nothing short of astounding. They have reduced debt, they have rebranded, they have launched new products. It is in keeping with his past experience at Barnes and Noble and Vitamin Shoppe (where Tolworthy was CEO before taking the Twinlab job),” Schneider said.

Schneider said Tolworthy and his team had rebuilt Twinlab into a powerhouse with significant operational strengths, including distribution in 45,000 retail locations in 55 countries and a lengthy product mix. Under Tolworthy, Twinlab engaged in more successful and sophisticated marketing campaigns and launched a “clean” sports nutrition line that now features Solazyme’s new algal protein, among other innovative ingredients.

Acquisition strategy

The new entity will build on those formulation and marketing strengths and add three “targeted” (but as yet unspecified) acquisitions, Schneider said.

“It will leverage the distribution expertise of the old Twinlab with some manufacturing skills and some very strategic product mixes. The marriage of the old Twinlab with these three companies is just the framework for future acquisitions,” he said.

“I think there are a number of good private companies out there. Smaller companies that are effectively stranded in their own market position. They need the distribution. They need the in-house manufacturing. The conduct of any potential acquisition by the new Twinlab will take into account those in house efficiencies,” he said.

“We completely concur with Tom’s vision here. The health and wellness field is a very fragmented industry. There are a couple of larger players, and beneath that sphere there are hundreds of companies. It is very ripe and prone now for consolidation,” Schneider said.