Natural Foods Merchandiser

We're ready to buy, NBTY exec says

NBTY Inc. expects to be "very active in acquisitions this current year," its president and chief financial officer told an investment conference Feb. 17.

Harvey Kamil said the Bohemia, N.Y., supplements maker and retail operator is "seeing a lot of deals" in both the United States and Europe. Companies in play in the nutrition industry inevitably approach NBTY because of its reputation as a consolidator. "We hang around and the deals come through the door," he said. "We're hoping to do something [in 2005]."

Kamil spoke to financial analysts and investors at the Citicorp Smith Barney Small and Mid-Cap Conference in Las Vegas.

"The industry right now is under pressure," he said. While the slowdown puts downward pressure on NBTY's share price, giving it less currency for acquisition, it also lowers the value of target companies. As a consolidator, "It's very good times for us," he said.

Sales rose 21 percent in the first quarter to $142 million in NBTY's European division, which includes 485 Holland & Barrett stores in the United Kingdom, 14 Nature's Way stores in Ireland and 67 De Tuinen stores in the Netherlands. "When we start advertising, we start moving merchandise," in Europe, where price-and-item pitches are unusual in the nutrition business, Kamil said. Because NBTY manufactures its products in the United States, it can offer for about $10 a product for which U.K. competitors charge $34.

NBTY's largest holding is its wholesale division, which sells to naturals stores under the Good N' Natural and American Health brands, and makes private-label products for the likes of Wal-Mart and Osco Drug. The wholesale division represented 42 percent of NBTY's total sales in the first quarter of 2005.

Positive growth was also seen from its Puritans Pride direct-response division, which grew 28 percent to $45 million in the three months ending Dec. 31, 2004.

NBTY made 21 acquisitions between 1989 and 2003, picking up manufacturers and retail stores in the United States and Europe. Its last deal was in 2003, when NBTY acquired Rexall Sundown from the Dutch conglomerate Royal Numico.

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