Natural Foods Merchandiser

Twinlab Files Ch. 11, Agrees to Sell

Buyer IdeaSphere includes Robbins, ex-Amway execs in management team

A little-known buyer with some big-name executives—including personal-power guru Anthony Robbins—has agreed to buy Twinlab Corp. for $65 million in cash.

Twinlab announced the deal Sept. 4 and filed for Chapter 11 reorganization under the U.S. Bankruptcy Code, citing $91.5 million in assets and $116.5 million in liabilities, including $74 million in debt. But the door may still be open for other suitors, analysts said.

"At the end of the day, more bids can come to the table," said Carole Buyers of RBC Capital Markets in Denver. "The Twinlab brand is very strong and still has credibility."

The proposed buyer, Grand Rapids, Mich.-based IdeaSphere Inc., is headed by Amway heir Dave Van Andel and former Amway Chief Operating Officer Bill Nicholson. Robbins is a principal and vice chairman.

Twinlab had been in a downward spiral for the last few years, while forced to reformulate or discontinue products containing ephedra, which had accounted for 21 percent of its $147 million in sales in 2002. But "Twinlab's issues go well beyond ephedra," noted Pat Turpin, managing director at USBX Advisory Services in Santa Monica, Calif. The company focused its sales efforts on the mass channel and "ultimately, a lot of those products became commodities," Turpin said. "They were left with declining sales in multiple categories."

But it's a brand that many in the industry believe still has legs, Turpin said.

Robbins told The New York Times last month that he "want[s] to own" the wellness business. He markets a line of Inner Balance supplements along with his books, tapes and seminars. IdeaSphere President and Chief Operating Officer Mark Fox added, "Consumers are looking for a partner, someone they can trust to tell them what to do on a daily basis ... Tony is here to make the emotional connection between the consumer and those products."

There's a cash connection, too. Supplements and healthy foods "are commanding tremendous margins," Turpin said. Twinlab has several top-selling weight-loss brands, which is the industry's hottest category. "This clearly, instantly, offers [Robbins] a credible product offering."

IdeaSphere also owns Rebus Publishing, which puts out the UC Berkeley Wellness Letter and the Johns Hopkins medical letter, Health After 50.

Whatever IdeaSphere's plans might be for Twinlab, they were enough to motivate the firm to enter the bidding late in the game and outbid several competitors.

On Sept. 10, Twinlab secured the first $8.8 million of $35 million in new financing that enables it to retain its 430 employees, run manufacturing lines at its plant in American Fork, Utah, and ship products to retailers.

"Financing is in place for us to continue operating as usual," spokesman Bill Rizzardi said.

Filings made Sept. 8 with the U.S. Securities and Exchange Commission show that IdeaSphere will acquire nearly all the assets and $3.7 million in liabilities of Twinlab, including inventory, intellectual property and receivables.

When the deal was announced Sept. 4, IdeaSphere's Fox said that Twinlab CEO Ross Blechman, son of the company's founders, would stay on as president. The Blechman family owns 29.8 percent of Twinlab's common stock.

Blechman was unavailable to comment. Fox and an IdeaSphere spokesman did not return calls.

Founded 30 years ago, Twinlab followed an aggressive acquisition and expansion path in the late 1990s. It sells sports nutrition, diet products and supplements under the Twinlab and "Fuel" brand names, plus Nature's Herbs supplements and Alvita teas.

In August, Twinlab said it expected to report a net loss of $10.4 million on $37.2 million in sales for the quarter ended June 30, compared to a loss of $3.6 million on $40.2 million in sales for the year-ago quarter.

Natural Foods Merchandiser volume XXIV/number 10/p. 1, 11

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