HGGC and publicly traded Nutraceutical International have entered into an agreement under which Nutraceutical will be acquired by HGGC at an enterprise value of approximately $446 million. Nutraceutical is a former Bain Capital portfolio company that was taken public in 1998.
Nutraceutical (NASDAQ: NUTR) is a manufacturer, marketer, distributor and retailer of more than 7,500 SKUs of branded nutritional supplements and other natural products sold primarily to and through domestic health and natural food stores. The company’s products are sold under numerous brands including Solaray, KAL, Dynamic Health, Nature’s Life, LifeTime, Natural Balance, and many others. The company also owns neighborhood natural food markets, which operate under the trade names The Real Food Company, Thom’s Natural Foods, Cornucopia Community Market and Granola’s. Nutraceutical also owns health food stores, which operate under the trade name Fresh Vitamins. Nutraceutical is based in Park City, UT (www.nutraceutical.com).
For the fiscal year ending September 30, 2016 Nutraceutical had revenues of $235 million and EBITDA of $43 million. “We are pleased to announce this transaction, which delivers significant value to our stockholders, many of whom have been with us since our initial IPO in 1998,” said Bill Gay, Chairman and Chief Executive Officer of Nutraceutical. “We are excited to be joining forces with HGGC, which is a world-class private equity firm. HGGC’s expertise in formulating strategic growth plans for middle-market companies will be a great platform for the future of Nutraceutical.
HGGC (formerly Huntsman Gay Global Capital) makes leveraged buyout, recapitalizations and growth equity investments in middle market companies. The firm invests from $25 million to $100 million of equity per transaction in companies that have revenues of $100 million or more, enterprise values of $100 million to $500 million, and EBITDA of $15 million or more. In December 2016, HGGC closed its third fund, HGGC Fund III, LP, with total capital commitments of $1.8 billion, surpassing the Fund III target of $1.5 billion and reaching the $1.75 billion hard cap, exclusive of the general partner’s capital commitment. HGGC is based in Palo Alto (www.hggc.com).
“Nutraceutical is an impressive company with a diverse portfolio of brands and thousands of satisfied retail customers, as well as millions of loyal consumers who rely on its products,” said Les Brown, Managing Director and Chief Operating Officer of HGGC. “Nutraceutical is a great example of a successful roll-up strategy carried out with consistency and dedication over the last 25 years. We have long admired their disciplined market approach, which has allowed the company to consistently generate strong financial returns and positive cash flow.” From January 1995 to April 2007, Mr. Brown was the Chief Financial Officer of Nutraceutical International. He joined HGGC in January 2008.
Bill Gay and Jeff Hinrichs, Chief Operating Officer and Executive Vice President of the company, who own approximately 7.9% and 2.5% of the company’s outstanding common stock, respectively, have entered into voting agreements pursuant to which they have agreed to vote all of their shares in favor of the transaction. The company will undertake a 60-day “go-shop” period during which a special committee of the board of directors will solicit, evaluate and potentially enter into negotiations with parties who offer alternative proposals.
Peter J. Solomon Company is the financial and strategic advisor to Nutraceutical. Piper Jaffray is acting as the financial advisor to HGGC and Kirkland & Ellis is acting as its counsel. The Kirkland team is led by corporate partners Joshua Zachariah, Travis Nelson and Joseph Halloum.
This transaction is expected to close in the second half of 2017.
© 2017 Private Equity Professional | May 20, 2017
