07/05 12:53 FOCUS-Dutch Numico to
buy U.S. GNC for $2.5 bln
(adds background, quotes, recasts) By Eric Onstad
AMSTERDAM, July 5 (Reuters) - Dutch food group Numico NV
<NUMCc.AS> said on Monday it would buy U.S. food supplement maker
and retailer General Nutrition Cos Inc. (GNC) <GNCI.O> for $2.5 billion.
The friendly takeover would create a food supplements giant with sales of
about $3.0 billion and a workforce of about 27,000, Numico said.
"This is a strategy-driven merger that allows both parties to take advantage of
the growing global demand for health products," GNC President William
Watts said in a statement.
Numico's strength in clinical research and GNC's U.S. food supplements
market share of 13 percent are a good match, the firms said.
The combined company should be able to boost sales by 600 million guilders
($278.6 million) within three years and the deal will immediately bolster
earnings per share, they added.
Numico, whose core product has been baby food, said a number of new
products it was developing would now be able to be widely distributed without
extra marketing costs.
The $25 per share bid -- a 31 percent premium over GNC's 30-day average --
is worth $1.77 billion. Numico will also assume $760 million in debt, making
the total transaction worth $2.5 billion.
GNC, with a 1998 turnover of about $1.42 billion, sells its products in 4,203
specialty shops in all 50 U.S. states and in 25 foreign markets.
The U.S. food supplement sector is growing at 14 percent per year with total
1998 sales of $8.9 billion expected to rise to $16.6 billion in 2003, Numico
said.
About 45 percent of Americans take vitamins.
GNC has recently agreed on an alliance with U.S. mass market retailer Rite
Aid and another with drugstore.com, the leading Internet seller of health and
nutrition products.
Watts and other GNC senior managers have decided to remain with Numico
and Watts is due to join the executive board.
The takeover will initially be financed through bridging bank loans, and later
partly refinanced by issuing both Numico shares and subordinated
convertible bonds worth a total of about 1.05 billion euros. ((Amsterdam
newsroom +31 20 504 5000, Fax +31 20 504 5040
amsterdam.newsroom@reuters.com))
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