Danone entered into an agreement yesterday to purchase Medical Nutrition USA Inc. (MNI) for $62 million in cash. MNI will become part of Nutricia North America, Danone’s North American medical nutrition business, and the deal is expected to close early in the third quarter.
That is unless Ryan & Maniskas, LLP has something to say about it. The national shareholder litigation firm is investigating MNI for alleged breaches of fiduciary duty. The firm is particularly concerned that MNI’s board did not adequately shop the company for fair consideration in the marketplace prior to accepting the Danone bid and that Danone is underpaying for Medical Nutrition shares, thus unlawfully harming Medical Nutrition stockholders.
MNI develops and distributes liquid protein supplements for the elderly and long-term-care patients, including dialysis and bariatric surgery patients. Sales reached $16 million in fiscal year 2010, so the acquisition should be material to Nutricia, with annual sales of $70 million.
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We’re getting old. It should come as no surprise that the market for nutritional medicine—primarily targeted to dialysis clinics and nursing homes—is one of interest and growth. That MNI, a pioneer in this field, was snapped up by a multinational conglomerate like Danone makes eminent business sense—especially given the fact that company already operates in the infant liquid nutrition business and maintains a strong presence in the pharmacy sales channel. The question of whether or not this deal will ultimately be consummated, however, depends on factors beyond the scope of simple economics, as the lawsuit so clearly indicates.
Get ready for NBJ’s own investigation of finance and investment in the nutrition industry. Our August issue will cover these topics, and more—subscribe now through our website.
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