GNC goes to Apollo for $750m
been bought for $750 million by a New York-based investment firm
Apollo Management. Parent company, the Netherlands-based Royal
Numico, will now liquidate its US operations.
The world's biggest supplement manufacturer and marketer GNC has been bought for $750 million by a New York-based investment firm.
GNC's parent company, the Netherlands-based Royal Numico, will now liquidate its US operations, which also included Rexall Sundown and network marketer Unicity, until a series of divestments this year.
Numico has also sold off the last of its European supplements businesses, Vitamex, to Swedish consumer healthcare firm Wilhelm Sonesson for €31 million, in the second deal announced today.
The GNC transaction is still subject to customary regulatory approvals but is expected to be completed in the fourth quarter of 2003. Industry insiders have long been speculating on the sale but Numico CEO Jan Bennink continued to insist on the option of keeping GNC within the group and looking at new ways of turning around the business. Numico has however clearly received a 'compelling offer' encouraging it to sell now.
"The divestment has many advantages for Numico: it will significantly reduce the risk level, both financially and operationally, provides us with more financial flexibility and allows management to focus completely on maximising profitable growth in both Baby Food and Clinical Nutrition," commented Bennink.
"This action gives us the certainty to achieve our aggressive goals of sales growth and EBITA margin," he added.
Other bidders for GNC were rumored to have included leading supplement manufacturer NBTY although the firm did not confirm its involvement. It has already bought Rexall Sundown, and the European Health & Diet Group and FSC from Numico earlier this year.
GNC has more than 5,300 stores worldwide and strong brand value but it has been hit hard in the last year by the rapid decline in sales of one of its leading herbal products, ephedra. Numico's 2003 first half results showed slightly improved sales at the retailer, excluding ephedra products and substitutes, but the US activities have been a major factor in Numico's growing losses. The sale will significantly cut its debt as well as reduce earnings volatility and retail exposure. It also significantly reduces Numico's exposure to the US dollar.
Peter Copses, a senior partner at Apollo Management, commented: "We are delighted to be able to acquire GNC", adding that it was 'a powerful brand'.
The liquidation of Numico USA will bring a fiscal loss of approximately €1,150 million that will result in a tax credit (deferred tax asset) of around €400 million in the Netherlands to be used over a period of 10 to 12 years through future taxable profits in the Netherlands. The net impact of the impairment charge will be approximately €375 million.
Meanwhile, the change of hands of Vitamex in Sweden gives Wilh. Sonesson, which had first half sales of SK294 million, an important lead in the healthcare market in the Nordic region.
Numico will now begin concentrating on the high margin activities of infant nutrition. It is also restructuring operations in its baby food operations to restore growth.
