ACI Capital and American Securities Capital Partners Complete Acquisition of Phillips Health

NEW YORK, Sep 1, 2004 /PRNewswire-FirstCall via COMTEX/ -- ACI Capital Co., Inc., ("ACI Capital") and American Securities Capital Partners, LLC, ("ASCP"), both New York-based private equity investment firms, announced today that they had completed the acquisition of a majority of the assets of Phillips Health, LLC in partnership with the company's existing management.

Terms of the transaction were not disclosed.

Phillips Health is a division of Phillips International, Inc., a publishing company based in Potomac, MD that was founded in 1974 by Chairman Thomas L. Phillips. Phillips Health is a leading direct-marketer of branded nutritional supplements, health-oriented newsletters and related health products. It has created platform brands around six health experts with backgrounds in cardiology, women's health, internal medicine and other disciplines and who share the company's core commitment to effective health advice and products and consumer education. Phillips Health generates approximately $180 million in annual revenue.

Phillips Health's existing management will continue to run the new entity and no changes in operations are envisioned. Kevin Donoghue, Phillips Health's CEO, said, "We are extremely excited to enter into this new partnership with ACI Capital and ASCP. The experienced investors at ACI Capital and ASCP bring a wealth of resources to the company and all of us are excited to work with them to continue growing this business. This new partnership will allow us to continue to pursue our current growth initiatives and to potentially uncover new opportunities for additional expansion."

Phillips International Chairman Thomas L. Phillips said, "ACI Capital and ASCP are fine firms. Both have histories of investing in growth companies and taking them to the next level. I am pleased that Kevin Donoghue will continue to lead the Phillips Health team and that the company will stay at its current location. The company will prosper with the additional resources provided by the new ownership. I am excited to continue with Phillips Health as both an investor and as an advisor."

Kevin Penn, a Managing Director of ACI Capital, said, "Phillips Health typifies our portfolio strategy of investing in growth-oriented companies that have leading market positions, strong brand equity, experienced management and a solid customer base. The company is well positioned to capitalize on the growth in the nutritional supplement industry. We are excited to be partnering with Phillips Health's managers and employees as we work to build upon the company's success."

David Horing, a Managing Director of ASCP, commented, "Kevin Donoghue and his team have done an excellent job in building a very successful business model. Given our experience investing in other direct marketing companies, we have been impressed by the management team's disciplined approach to customer acquisition and its commitment to providing consumers with leading experts' viewpoints on alternative therapies. Since its formation, Phillips has managed to establish a remarkable bond with its customer base."

ACI Capital and ASCP had initially announced their agreement to acquire Phillips' assets on August 12, 2004.

Weil, Gotshal & Manges LLP and Collier Shannon Scott PLLC served as legal advisors to ACI Capital and ASCP. JP Morgan acted as Phillips Health's financial advisor and provided financing for the transaction. Sullivan & Cromwell LLP and Shulman Rogers Gandal Pordy & Ecker P.A. served as Phillips Health's legal advisors.

About Phillips Health:

Phillips Health is a leading direct marketer of branded nutritional supplements and health newsletters. Phillips Health publishes the health- oriented newsletters Health and Healing, The Sinatra Report, Alternatives, The Lark Letter, Wellness Advisor and Naturally Well Today. The company also develops and sells proprietary, branded nutritional supplements based upon the research of the health experts whose work Phillips Health publishes. For more information, please visit

About ACI Capital:

ACI Capital is a private investment firm with nearly 50 years experience in leading middle-market management buyouts and growth capital investments across a broad spectrum of industries throughout North America. ACI Capital is an active partner with management in building the value of its companies. Today, the firm manages capital on behalf of more than 70 high net worth families and institutions. For more information, please visit

About American Securities Capital Partners:

American Securities Capital Partners ("ASCP") began as a family investment office founded in 1947 by the late William Rosenwald to manage his share of his family's Sears Roebuck fortune. ASCP is currently investing its third private-equity investment fund with outside investors -- primarily high net worth families and individuals -- and manages more than $1 billion of equity capital on a discretionary basis. For more information, please visit

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