07/05 11:02 General Nutrition in Merger Agreement
with Royal Numico <GNCI.O>
General Nutrition in Merger Agreement with Royal Numico
$2.5 Billion Transaction to Create a Global Leader in Human Nutrition
Dutch Company Accesses High-Growth U.S. Supplements Market;
GNC Gains Access To Major Nutrition Research Capabilities
ZOETERMEER, The Netherlands and PITTSBURGH, July 5 /PRNewswire/ --
Royal Numico N.V. (Amsterdam Stock Exchange: NUTV), a leading
European manufacturer and marketer of specialized nutrition products, and
General Nutrition Companies, Inc. (Nasdaq: GNCI), a leading manufacturer
and retailer of nutritional supplements in the U.S., today announced they
have signed a definitive merger agreement that will create a global leader in
human nutrition. Under the terms of the agreement, Numico will make a $25
per share cash tender offer for all of GNC's approximately 75 million
outstanding shares and options and will assume $760 million in debt, valuing
the transaction at approximately $2.5 billion.
The combined company would have pro forma sales of approximately US$3.0
billion, based on the fiscal 1998 financial statements of Numico and GNC,
and will have nearly 27,000 employees worldwide. Numico expects the
merger to result in significant incremental revenue from new product
development and, based on currently available information, believes the
transaction will be immediately accretive to earnings.
In a joint statement, J.C.T. van der Wielen, President and CEO of Numico,
and William E. Watts, President and CEO of GNC, said, "This merger
creates the largest company in the world exclusively devoted to human
nutrition. It enhances GNC's current leading position in the U.S. nutritional
supplements segment and positions Numico to be a leader in the worldwide
supplements market -- a market where proprietary research coupled with
marketing and branding expertise will determine category leadership."
The two executives cited several other complementary strengths of the
combined companies:
-- Numico's leadership in clinical research on human nutrition reinforces
GNC's focus on science-based consumer products as a key market
differentiator.
-- GNC's proven ability to develop and market branded product in the U.S.
offers crossover potential for Numico's existing lines of supplements
in Europe.
-- Numico's global view of the nutrition business will accelerate GNC's
evolution into an international marketer of nutrition products.
-- GNC's leading role in nutrition marketing in the U.S. complements
Numico's strong market presence and distribution in Europe and Asia.
Mr. van der Wielen said, "The U.S. has long represented a significant
opportunity for Numico, but we wanted to enter this market with a partner
who could give us critical mass in marketing, manufacturing and branding.
GNC is the solution to our needs. They have the largest manufacturing
facility for supplements in the U.S. The GNC brand has broad awareness,
credibility and acceptance with a wide range of American consumers. And,
they are a leader in the specialty retail channel in the U.S. for vitamins and
other nutritional supplements. We are very pleased with this transaction.
"Moving forward," he added, "Numico is committed to maintaining and
expanding GNC's existing business, including its successful use of
franchising. Also, we look to fully utilize GNC's expanded manufacturing
capabilities in South Carolina."
Mr. Watts said, "We strongly believe the merger is in the best interests of
GNC shareholders. It also reflects an exciting new phase in the evolution of
our company. GNC already has a leading market share in the U.S.
supplement segment. Building on our leadership in the specialty retailing
channel, we have created a major strategic alliance with Rite Aid to access
the mass market channel and we have just announced an alliance with
drugstore.com, the leading e-retailing source for health and nutrition
products, to access the fast-growing electronic channel. What this deal does
for GNC is to further enhance our strong position in supplements through
access to world class nutrition research that will result in new proprietary
products.
"This is a strategy-driven merger that allows both parties to take advantage of
the growing global demand for health products," Mr. Watts continued.
"GNC's current management team, which was the engine behind our 21%
compounded annual growth rate in sales between 1993 and 1998, is
committed to working with our new parent to expand GNC's penetration of
nutrition retailing, both in the U.S. and in key international markets."
GNC President and CEO William E. Watts and the senior managers of the
company have entered into employment agreements to remain with Numico
following the merger. Additionally, Mr. Watts is expected to be named to the
Board of Managing Directors of Numico.
The Board of Directors of GNC has unanimously approved the tender offer
and the merger and has recommended that GNC shareholders tender their
shares. Numico will commence a tender offer for GNC shares not later than
July 12, 1999. The tender offer will be conditioned upon the valid tender of a
majority of the GNC shares, on a fully diluted basis, as well as review under
the Hart-Scott-Rodino Act and other customary conditions. Any shares not
acquired in the tender offer will be acquired in a second step merger at the
same price per share. J.P. Morgan & Co. Incorporated will be the
dealer-manager and MacKenzie Partners will be the information agent for the
tender offer. The financial advisor to Numico was J.P. Morgan & Co.
Incorporated, and Morgan Stanley Dean Witter was the advisor to GNC. The
acquisition will be financed through a bridge facility which Numico intends to
refinance, in part, through an equity offering and a subordinated convertible
bond issue aggregating approximately Euro1,050,000,000.
Royal Numico N.V. (www.numico.com), headquartered in Zoetermeer, The
Netherlands, is a holding company of a group of leaders in specialized
nutrition, such as Nutricia, Milupa and Cow & Gate. Numico concentrates on
the development, manufacture and sales of specialized nutrition products,
based upon medical scientific concepts with a high added value. The
company operates in more than 40 countries, including major market centers
in Europe, including Russia; Turkey; and the Pacific Rim, ranging from China
to New Zealand. Numico had net sales of US$1.6 billion, and operating
income of US$238 million for the year ended December 31, 1998.
General Nutrition Companies, Inc. (www.gnc.com), based in Pittsburgh, PA,
is the only nationwide specialty retailer of vitamin and mineral supplements,
sports nutrition and herbal products and is also a leading provider of personal
care, fitness and other health related products. The company's products are
sold through a network of 4,203 retail stores operating under the General
Nutrition Centers, Health & Diet Center and GNC Live Well names, of which
2,726 are company-owned and 1,477 are franchised. The Company's stores
are located in all 50 States, Puerto Rico and 25 foreign markets. For the
fiscal year ended February 6, 1999, GNC had net revenue of $1.42 billion,
and net earnings of approximately $91.0 million. GNC + Numico 'Global
Leadership'
-- This merger creates the largest company in the world exclusively
devoted to human nutrition. -- This deal enhances GNC's current leading
position in nutritional
supplements in the U.S. and perfectly positions Numico to be a leader
in the global supplements market -- a market where proprietary research
coupled with marketing and branding expertise will determine the
category killer.
The Companies
General Nutrition Royal Numico
Largest specialty retailer of Leading manufacturer of specialized
nutritional supplements in U.S. nutrition products. Operations in
-- 4,203 stores in all 50 states more than 40 countries.
and 25 foreign markets.
Fiscal 1998 net revenues 1998 net sales - $1.6 billion.
-- $1.42 billion.
Estimated 13% of domestic share Leading share of specialized
in supplements segment. nutrition products for children and
people with special nutrition needs
-- also nutriceuticals and
dairy-based consumer products
Largest manufacturer of Manufacturing facilities in more than
supplements in U.S. 50 countries around the world;
(Greenville, S.C. plant). research facilities in The
Netherlands, Germany, the U.K. and
Australia.
Headquartered in Pittsburgh, Pa.; Headquartered in Zoetermeer, The
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