Vitamin Shoppe buys FDC Vitamins

Retail giant marches toward vertical integration with acquisition of its contract VMS manufacturer.

Vitamin Shoppe Inc. (the Company) a leading multichannel specialty retailer of nutritional products, announced that it has purchased FDC Vitamins LLC, doing business as Nutri-Force Nutrition, a contract manufacturer of vitamins, minerals and supplements (VMS) from MBF Healthcare Partners LP and other minority holders. Nutri-Force is a current manufacturer for the Company as well as for other domestic and international customers and distributors. 

The transaction was structured as a purchase of FDC Vitamins LLC equity by a wholly owned subsidiary of the Vitamin Shoppe. The purchase price is approximately $85 million which includes a $5 million earn out based on 2014 financial performance. The purchase price will be paid with available cash. The acquisition of Nutri-Force is expected to be neutral to slightly accretive to 2014 earnings per share, excluding transaction and integration costs. 

Commenting on the transaction, Tony Truesdale, the Vitamin Shoppe's CEO stated, "I am very pleased to announce plans to expand our sourcing capabilities with the strategic acquisition of Nutri-Force. The company is attractive to us for a number of key reasons that fit with our long-term needs and include: a high-quality management team, product development expertise and capability, and the ability to produce and ship from one facility four key form factors—soft gels, tablets, powders and capsules. Furthermore, Nutri-Force is an industry-leading contract manufacturer with thriving partnerships that we intend to fully support." 

Mr. Truesdale further commented, "Being vertically integrated is strategically important for the Vitamin Shoppe with benefits including, international product registrations, increased speed to market with new products, earlier visibility into new product trends and control over our product formulations. We will continue to rely on existing trusted contract manufacturers in order to mitigate the risk of single-source supply." 

Anthony Alfonso, president, founder and CEO of Nutri-Force, stated, "I am thrilled that the next phase of Nutri-Force's growth will be combined with the Vitamin Shoppe. As part of the Vitamin Shoppe family, Nutri-Force will be thoughtful and disciplined as it grows the business while at the same time leveraging the strengths and scale of the Vitamin Shoppe."

Reflecting this transaction, and subject to finalization of purchase accounting, the Vitamin Shoppe has updated the following items from its previously issued 2014 Outlook and expects the following:

  • Depreciation and amortization of approximately $33 million
  • EBIT margin decline between 50 to 100 basis points year over year

Stifel is acting as financial advisor to the Vitamin Shoppe and K&L Gates, LLP is serving as legal counsel. Houlihan Lokey acted as financial advisor to Nutri-Force and Holland & Knight LLP served as legal counsel.

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