Numico divests last of supplement activities
major deals announced today. Vitamex goes to Swedish firm Wilhelm
Sonesson for €31 million, while an investor group is buying US
retailer GNC for $750 million.
Numico is to sell its Vitamex supplements business to Swedish consumer healthcare firm Wilhelm Sonesson for €31 million, in a final departure from the European supplements market.
Jan Bennink, CEO of Numico, said: "We view the sale of Vitamex as the last important withdrawal from the European nutritional supplements market. Through the proceeds of Vitamex we have also reached total divestiture proceeds of above €300 million as was targeted in March of this year."
The firm also announced today the sale of its US retail business GNC to Appollo Management, a New York-based investor group, for $750 million. The transaction is subject to customary regulatory approvals and is expected to be completed in the fourth quarter of 2003.
"The decision to divest GNC is based on an assessment of our business strategy, where we see limited synergies with our current core businesses. The divestment has many advantages for Numico: it will significantly reduce the risk level, both financially and operationally, provides us with more financial flexibility and allows management to focus completely on maximising profitable growth in both Baby Food and Clinical Nutrition," commented Bennink.
Industry insiders have long been speculating on this sale but Bennink continued to insist on the possibility of keeping GNC within the group and looking at new ways of turning around the business. However Numico had clearly received a 'compelling offer' encouraging it to sell now.
"This action gives us the certainty to achieve our aggressive goals of sales growth and EBITA margin," said Bennink.
Numico's US activities, a major factor in its growing losses, have been rapidly divested over the last year. The sale of GNC, the world's largest manufacturer and marketer of supplements and vitamins, with net sales of €625 million in the first half of 2003, will help ease the burden of debt for the group as well as reduce earnings volatility and retail exposure. It also significantly reduces Numico's exposure to the US dollar.
The firm will liquidate Numico USA causing a fiscal loss of approximately €1,150 million that will result in a tax credit (deferred tax asset) of around €400 million in the Netherlands to be used over a period of 10 to 12 years through future taxable profits in the Netherlands. The net impact of the impairment charge will be approximately €375 million.
Meanwhile, the change of hands of Vitamex in Sweden gives Wilh. Sonesson, which had first half sales of SK294 million, an important lead in the healthcare market in the Nordic region.
Based in Norrköping, Vitamex has its own 5,000-sq metre GMP plant, approved for the production of pharmaceuticals, vitamins and minerals. Products manufactured at the unit are sold via the 52-store Naturapoteket chain in Sweden, the country's largest health-product retailer, and a significant mail order business - Naturpost in the Nordic Countries and Sana Direct in the Netherlands.
"We are a long-term player in the personal care market. We will now secure access to proprietary production, product development and proprietary brands," said Bo Hakansson, CEO and principal owner of Wilh. Sonesson.
Vitamex also adds new distribution channels and sales network to the business. Export operations, to the UK, US, Germany, Poland and Australia, offer finished products, private labels, bulk sales and subcontract manufacturing to international customers, such as the Tesco supermarket chain in the UK.
"Naturapoteket has quickly grown into one of the strongest brands in the sector. The product range and the store concept have also attracted international attention. Much has happened in our neighbouring countries and we plan next year to be able to sell and distribute over-the-counter (prescription-free) pharmaceuticals. We will hold discussions with the industry's representatives before we decide on the future of Naturapoteket, since we previously stated that we should not be a player in the retail channel," added Hakansson.
Sales at Vitamex, which employs around 300 people, reached €60 million with a limited EBITA contribution in 2002. These are expected to reach SK550 million in 2003. Vitamex president, Petter Lundstrom, a company employee for 17 years will retain his position.
The Swedish deal is expected to be completed by the end of October 2003.
