Metabolife International Inc. filed July 1 for Chapter 11 bankruptcy and IdeaSphere Inc. proposes to repeat the strategy that brought it Twinlab by acquiring Metabolife's nonephedra business for $23.5 million.
The deal includes Metabolife's production plant in Orem, Utah, and a distribution center in Memphis. The San Diego-based weight loss supplement company filed in the U.S. Bankruptcy Court, Southern District of California, and will auction its assets in September, the company said in a statement.
Ephedra was the major ingredient in Metabolife 356, once the company's best-selling product. Metabolife removed the stimulant herb from its offerings in 2003, but lawsuits from users have dragged financial results down, the statement said.
"We looked at buying Metabolife a year ago, but we couldn't get comfortable with the ephedra issues," said Mark Fox, president of Hauppauge, N.Y.-based IdeaSphere. Metabolife?s investment banker recontacted IdeaSphere about six weeks ago, Fox said, proposing a bankruptcy-based restructuring.
The Orem plant produces nutrition tablets and powders, while Twinlab's plant eight miles away in American Fork, Utah, produces two-piece capsules. Instead of outsourcing tablets and powders, IdeaSphere will be able to produce all three formats in-house, Fox said. Metabolife's plant also includes "a state-of-the-art pilot lab and product development lab, which enhances our current facilities," he said.
IdeaSphere pulled Twinlab, Nature's Herbs and Alvita Teas out of mass-market distribution in 2004, saying Twinlab would concentrate on the natural products retail channel. The three companies proved to be a more complicated project than their buyers thought, Fox said. "Some distributors had 35-plus weeks of product. It took 18 months to work through the inventory in the pipeline."
Buying Metabolife gives IdeaSphere a new mass-market presence. "It?s still a pretty good brand in mass," Fox said. Its weight-loss products include Metabolife Ultra, Complete, Ultra Caffeine Free and Green Tea Formula.
IdeaSphere also plans to use Metabolife to spearhead an expansion into Asian markets, where its chief executive officer, Bill Nicholson, has substantial experience from his tenure with Amway. Vice Chairman Anthony Robbins will develop motivational programs for Metabolife's Asian markets, while another IdeaSphere unit, Rebus LLC, will launch new health and fitness publications for Asia.