Thursday, July 15, 2010

Carlyle Group to Buy NBTY for $3.8 billion

The Carlyle Group will pay $55 a share for NBTY, a leading global manufacturer and marketer of nutritional supplements. The private equity underwriter (PEU) stated in their press release:

“NBTY is an outstanding business with well-established brands, a proven vertically integrated multi-channel/multi-geography strategy and strong, long-standing customer relationships."

How might the $3.8 billion price tag (with debt comprising $2.4 billion) impact supplement prices? Does Carlyle plan for NBTY to buy supplies from any of its Chinese affiliates, which include fisheries, nutrients, infant formula, fertilizer, and wood?

Given Carlyle's cadmium children's jewelry and other debacles (some deadly), how might their PEU drive to maximize profit impact the following brands?

Nature's Bounty®
Vitamin World®
Puritan's Pride®
Holland & Barrett®
Worldwide Sport Nutrition®
American Health®
Good 'n' Natural®
Home Health™
Julian Graves
Natural Wealth

Time will tell. Indications show greed and the ethically challenged riding together.

Update 5-26-11:   NBTY reported second quarter results, which stated "Net loss was $20.1 million compared with net income of $46.1 million in the prior year. NBTY says the net loss is attributable to slower sales and costs related to its takeover by private equity firm The Carlyle Group in August 2010."  Carlyle is known for charging management fees, ramping up interest expense and taking special dividends.  Did that combo send NBTY to a second quarter loss?

Update 10-20-12:  Carlyle plans to pull $700 million from NBTY via a special dividend.   Carlyle put up $1.55 billion in equity when it purchased NBTY two years ago.