Nestlé’s US$5.75B acquisition of The Bountiful Company’s core brands to “open new channels”

30 Apr 2021 --- Nestlé has entered an agreement with global investment firm KKR to acquire the core brands of The Bountiful Company for US$5.75 billion, expected to close in the second half of 2021. 

The transaction includes the “high-growth” brands Nature’s Bounty, Solgar, Osteo Bi-Flex and Puritan’s Pride, as well as the company’s US private label business, which will be integrated into Nestlé Health Science (NHSc).

“This acquisition opens up new channels for us where we weren’t previously present – that is mass retail: food, drug and clubs,” Jacquelyn Campo, NHSc’s senior director of global corporate communications, tells NutritionInsight.

“This deal was about finding complementary products and channels, rather than filling a gap,” she notes.

The core brand acquisitions are especially attractive considering The Bountiful Company’s “great presence” in specialty retail, e-commerce and direct-to-consumer avenues in the US, while offering “significant opportunities for geographic growth.” 

The Bountiful Company’s sports and active nutrition brands Pure Protein, Body Fortress and MET-Rx, as well as Dr.Organic and the Canadian over-the-counter (OTC) business, “which do not complement the NHSc portfolio,” are not included in the deal.

The transaction is valued at US$5.75 billion on a cash-free, debt-free basis.Transaction details
The nearly US$6 billion acquisition arrives on a cash-free, debt-free basis, representing a multiple of 3.1x net sales and 16.8x EBITDA as of March 31, 2021.

In comparison, NHSc acquired Atrium Innovations and its brands, including Garden of Life and Pure Encapsulations, for US$2.3 billion in 2018.

Net sales of the acquired brands from The Bountiful Company were US$1.87 billion in the last twelve months ending March 31, 2021, with an EBITDA of 18.3 percent. 

This EBITDA will be negatively affected by one-off integration costs, which will be slightly dilutive to Nestlé’s underlying trading operating profit margin in 2021. The margin is expected to increase above the Nestlé Group average once synergies are fully implemented by 2024.

Origin story
Primarily through its Americas XII Fund, KKR acquired a majority interest in The Bountiful Company from The Carlyle Group in 2017. 

Carlyle Partners V and Carlyle Europe Partners III funds retained a minority stake in the company and are participating in the sale alongside KKR.

“Since KKR’s investment, The Bountiful Company has transformed into a leading, fast growth, pure-play nutrition platform through significant investments in talent, brand building, R&D, e-commerce and manufacturing capabilities,” highlights Felix Gernburd, managing director at KKR. 

NHSc’s key growth driver is its presence in vitamins, minerals and supplements, says Campo.Expanding the presence in vitamins
NHSc’s key growth driver continues to be its presence in vitamins, minerals and supplements, says Campo. In 2019, NHSc purchased Persona Nutrition, followed by its acquisition of the US collagen brand Vital Proteins in 2020. 

Other vitamin players in Nestlé’s portfolio include Wobenzym, Douglas Laboratories, Genestra, Orthica, Minami, AOV and Klean Athlete.

According to Nestlé’s full-year 2020 financial results, NHSc grew at a double-digit rate, reflecting higher demand for products that support health and the immune system.

In the past eight months, Nature’s Bounty alone has launched supplements targeting “round-the-clock” immune support, personalized nutrition and brain health.

Overall, the COVID-19 pandemic has exacerbated immune health concerns, bringing vitamins, minerals and supplements to the top of global consumers’ minds.

By Anni Schleicher

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