The Vitamin Shoppe sold to tax franchiser for $208 million

By Hank Schultz

- Last updated on GMT

Getty Images
Getty Images
The Vitamin Shoppe has been acquired by Liberty Tax in an all cash deal worth $208 million.

The deal values each Vitamin Shoppe share at $6.50, which was a 59% premium over the company’s 30-day weighted average stock price.   That sales price, while welcome news for those who recently bought the stock, represents a steep discount from the company’s heyday.  In late 2014 the company’s stock traded at more than $48 a share.

Steady decline

The Vitamin Shoppe went public in 2009.  After an initial honeymoon, the company has struggled with falling earnings for years. The Vitamin Shoppe reported $1.11 billion in sales in 2018.  For 2017, the figure was $1.15 billion and in 2016 sales were $1.29 billion.

The company tried a couple of strategies to stem that decline, which have yet to show marked success.  In mid 2018 the company allied with online shopping consultant GroupBy to boost its online shopping experience. Like GNC, its fellow brick and mortar supplement retailing giant, The Vitamin Shopper has seen online sales rise.  But they still represent a small fraction of overall sales and couldn’t rise fast enough to compensate for the company’s free fall.

The company also sold its manufacturing arm, Nutri Force Nutrition, in 2018.

Liberty Tax is the parent company of Liberty Tax Service, a chain of franchise tax preparation outlets. Earlier this summer the company announced a plan for strategic acquisitions.  The first of these was the purchase of Buddy’s Home Furnishings, a rent-to-own furniture store chain.  As of 2017, Buddy’s had 255 stores owned by franchisees and 31 company-owned stores.

Liberty says it intends to finance The Vitamin Shoppe transaction with up to approximately $170 million in debt financing and a combination of available cash and/or through the issuance of common stock of Liberty Tax. In connection with the execution of the merger agreement, Liberty Tax entered into debt commitment letters with institutional lenders and an equity commitment letter with an affiliate of Vintage Capital Management, LLC.

Franchise store emphasis

Pat Cozza, an independent member of the Board of Directors of Liberty Tax, stated, “We have great confidence in the value of The Vitamin Shoppe, its ongoing strategic reinvention plan and the outstanding efforts of The Vitamin Shoppe leadership team and associates. We believe that The Vitamin Shoppe is an excellent fit for Liberty Tax’s previously announced strategy to acquire franchise-centric businesses, and demonstrates the commitment of Liberty Tax, its board and management team to implement the previously announced strategic transformation of Liberty Tax.”

Sharon Leite, CEO of The Vitamin Shoppe, stated, “Following a careful and disciplined assessment, the board of directors has concluded that the acquisition proposal from Liberty Tax maximizes value for our shareholders. 

Leite has been CEO for a bit less than a year.

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