Glanbia plc, the Irish international cheese and nutritional ingredients Group, today announced the acquisition of Illinois based Optimum Nutrition, Inc. - a manufacturer of nutritional supplements for the sports sector, with what it says are some of sports nutrition’s most trusted brands in the USA – including ‘Optimum Nutrition’ , ‘Gold Standard 100% Whey’ and ‘ABB’. The total consideration for the acquisition is $315 million (€213 million). The business is being acquired on a debt free basis and will be funded from Glanbia’s existing resources.
Optimum is privately owned and has three operating facilities located in Illinois, South Carolina and Florida employing 387 people. It has a 22 year track record in the manufacture and supply of a range of whey based, premium nutritional supplements to the US and global sports nutrition markets. In 2007, Optimum generated US$185 million (€125 million) revenue and US$32 million (€22 million) operating profit. At year-end December 2007, the company had gross assets of US$51 million (€35 million).
Announcing the acquisition today, John Moloney, Glanbia Group Managing Director, said: "This is an exciting acquisition for Glanbia as it gives us a leading position of scale in a fast growing segment of the nutrition market. It is a close strategic fit with our core areas of expertise in whey and sports nutrition and brings us up the value chain into consumer markets. Optimum also fits very well with the Group’s stated growth strategy and ambition to continue to internationalise our business. The transaction is expected to be earnings enhancing from this year."
Commenting today, Kevin Toland, CEO and President of Glanbia USA, said: "Optimum is a strong business with an excellent track record and reputation in the sports nutrition market, particularly in the USA. The company has strong brands and a broad distribution network in an attractive market segment. We have a long standing relationship with Optimum and its leadership team and are delighted to welcome them to the Group. We look forward to growing and developing this business together into the future."
John O'Reilly analyst at Davy, commented today: "Glanbia has entered the B2C branded whey nutrition market in the US with the $315m acquisition of 22 year established Optimum Nutrition (ON). ON is a US manufacturer of nutritional supplements for the sports sector. Its brands — Optimum Nutrition (ON), Gold Standard 100% Whey and ABB — are leaders in the sports nutrition and muscle development category and are distributed through 10,000 retail outlets. Its two largest customers are thought to be the leading US nutritional retailers, GNC and Vitamin Shoppe. ON has a growing online business.
Whey-based products are the cornerstone of ON's product range and extensive format, protein powders, bars/bites and ready-to-drink sports beverages. But its range also includes vitamins, essential minerals and herbs. ON has limited export sales.
In 2007, ON had revenues of $185m and operating profit of $32m. At end-2007, it had gross assets of $51m. ON could add 1c to Glanbia's adjusted EPS (before goodwill amortisation) for this year and 2.5c next year.
ON is one of the largest purchasers of specialised whey (whey protein concentrate and whey protein isolate) in the US. Glanbia is believed to be a supplier but its own output is less than ON's requirements.
With the acquisition of ON, Glanbia is now a fully integrated nutrition enterprise from production, B2B (Seltzer, Kortus) through to final consumer. Whey, whey fractions and peptides have applications across the broad nutrition category (sports, diet and obesity, therapeutic body care). Glanbia had nutrition science and technology; route to market and customer lists were its deficit. But this deficit has been progressively eliminated through acquisitions. It now has routes to all market segments (B2B and B2C) and strong customer lists. New whey-based solutions for the various nutrition categories will be easier to introduce to market. Importantly, it also has capability in all formats (powders, bars, beverages etc.).
Value-added nutrition sales following the ON acquisition are of the order of $700m. The health and diet problems which abound present a very strong growth opportunity for the division.
Nutrition is now a key piece of valuation; it has more visibility because of branded retail presence. The current valuation does not recognise the strength and potential of Glanbia's nutrition offering."