GNC Holdings Inc. (NYSE: GNC), a leading global specialty retailer of health and wellness products, today announced it has acquired A1 Sports Limited (dba Discount Supplements), the leading multi-brand sports nutrition e-commerce retailer in the United Kingdom. The acquisition was funded with cash on hand. Terms of the deal were not disclosed.
Following the acquisition, GNC.com, LuckyVitamin.com and discount-supplements.co.uk will continue to operate as separate businesses, each with its own product offerings and target customers.
Joe Fortunato, GNC's chairman, president and CEO, said, "Discount Supplements offers a broad selection of competitively priced proprietary and third party products, and is a leader in the UK's sports nutrition market. This market—estimated to be ~£300 million—has demonstrated consistent double digit growth, which is forecasted to continue. The on-line channel has captured nearly one-third market share, and is growing faster than the market overall."
Mr. Fortunato continues, "Entering the UK and other key European and Scandinavian markets are core elements of our strategic plan to expand GNC's global reach. With this acquisition, we are well positioned to capitalize on the fastest growing channel in Europe's top market. We also see the potential to leverage GNC's marketing, product development and procurement capabilities to drive synergies. This includes having Discount Supplements introduce premium GNC sub-brands in the sports nutrition, vitamin and diet categories into the UK and other markets. We would like to welcome founder and Executive Chairman Stuart Harris along with key members of his management team who have agreed to participate in the continued growth of the business."
Mr. Harris said, "We are excited to enter the next phase of our company's growth. Combining GNC's strengths in product development and marketing with our loyal customer base will allow Discount Supplements to further develop and expand the business."
Discount Supplements, founded in 2004, is expected to grow to approximately £20 million in revenue in 2013, and generate positive EBITDA margin. GNC expects the acquisition to be earnings neutral in 2013, as the EBITDA contribution is offset by deal costs and amortization of intangibles.