Natural Foods Merchandiser

The Bargaining Table

Merger and acquisition activity has been heating up in the supplements and body care segments of the natural products industry. Here are three deals that caught our attention:

The Hain Celestial Group moved into the personal care business in a big way with the purchase of Jason Natural Cosmetics Inc. Terms of the deal were not disclosed.

With the sale, Hain established a new Whole Body Care Division, which will be headed by former Westbrae Naturals chief Andy Jacobson, at Jason's headquarters in Culver City, Calif. Former Jason CEO Jeffrey Light stays on as vice president of acquisitions and new product development. Look for the Jason product line to be streamlined and for several Hain brands, such as Earth's Best baby care products or Celestial Seasonings herbal products, to spin off body care line extensions. And look for the Hain roll-up specialists of Melville, N.Y., to snap up more shampoo and soap brands. "It's no different than the food business was 10 years ago," said Hain CEO Irwin Simon. "The personal care category is extremely fragmented."

Six months after Apollo Management LP acquired Pittsburgh-based GNC Corp. for $747.4 million, GNC filed for an initial public offering May 28 that could raise $345 million. GNC posted a profit of $16.2 million in the first quarter of 2004, compared with a $22.4 million loss for the year-ago quarter, when it was owned by Royal Numico NV. Apollo will control about 70 percent of GNC after the IPO, and some of the proceeds will be used to retire debt and repurchase shares held by Apollo. "If I'm a supps manufacturer, I want to see a healthy GNC," said Pat Turpin, who covers the business for USBX Advisory Services in Santa Monica, Calif.

Private-label manufacturer Leiner Health Products received a $650 million recapitalization led by North Castle Partners of Greenwich, Conn., and Golden Gate Partners of San Francisco. The deal includes $400 million in new debt. North Castle, whose stake in Carson, Calif.-based Leiner dates to 1997, stuck with Leiner through the ups and downs of the vitamin business and a prepackaged bankruptcy in 2002. Now the companies expect Leiner to grow in both supplements and over-the-counter pharmaceutical products.

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