The world’s largest food and beverage company, Nestle, has agreed to buy vitamin maker Bountiful Company for $ 5.75 billion. The deal hopes to be concluded in the second half of this year.
“This acquisition complements our existing portfolio of health and nutrition products in terms of brands and channels”, says Greg Behar, the CEO of Nestle Health Science. Behar added, “The purchase – from private equity firms KKR & Co. and Carlyle – is expected to double e-commerce revenue from supplements to around $ 1 billion this year.”
The value of the amount that Nestlé will pay is 3.1 times the value of Bountiful sales for the brands. It is equal to a multiple of 16.8 times their earnings before interest before taxes, depreciation and amortization (EBITDA).
The CEO’s strategy has allowed Nestlé to grow at double the pace forecast by analysts. It is expected to position itself as a world leader in minerals and supplements as the pandemic drives demand for pills for those who care about their health.
About 91% of people consuming supplements increased their consumption during the pandemic to strengthen the immune system, Behar said.
That said, Nestlé aims to provide more services that recommend specific nutrients to individual consumers. The idea is similar to the business of Persona, a custom vitamin company acquired in late 2019.
In the first quarter of 2021, the acquired brand achieved sales of $ 1.87 billion, with an EBITDA margin of 18.3%. Once the synergies are fully implemented by 2024, the same margin is expected to rise above the Nestlé group average, the Swiss company said.