23 Nov 2012 Reckitt Benckiser-Schiff: Another giant jumps into nutra space
UK-based consumer goods giant, Reckitt Benckiser, has clinched an £882-million (€1.09bn) deal, and outbid German pharma firm, Bayer, for the US’s second-biggest dietary supplements firm, Schiff Nutrition International, giving it a foothold in the £18-billion vitamins and nutrition pills market.
The company, which makes Cillit Bang cleaners, Nurofen, Clearasil skin treatments and Durex condoms, beat off stiff competition from its German peer which had already agreed to buy nutrition supplements group Schiff Nutrition for £750-million.
The deal has until December 14 to complete, but Reckitt Benckiser senior vice president of corporate affairs, Andraea Dawson, said it was safe to say it was a done deal has two shareholders who owned 85% of Schiff had agreed the deal. Only another 5% was needed.
Dawson said the UK firm had a strategy to move into nutrition, “as consumers increasingly self-medicate” and this is a key part of how consumers want to manage their health and wellness.
The deal follows others like Pfizer buying Danish supplements firm Ferrosan for an undisclosed amount in February 2011 although Pfizer did this year sell its infant nutrition business to Nestlé, pending anti-trust approval.
Reckitt Benckiser made the offer from cash reserves. Dawson said the firm had a strong balance sheet and that the firm had further reserves available for other acquisitions, although it would, “see how this goes first”.
Dawson said her firm wanted to expand Schiff’s brand presence in the US and had an eye on global markets too.
As to why the company chose Schiff to invest in, Dawson noted a highly fragmented landscape where no single player commands more than 5% of the global market share. Other major brands include Solgar, Centrum, Pharmavite, Herbalife, Nature’s Own and Seven Seas.
Utah-based Schiff had revenue of $259m (€200m) for its fiscal year ended May 31, 2012 and does 90% of its business in the US with brands like krill omega-3 offering, MegaRed; glucosamine joint health product Move Free; and immunity supplement, Airborne.
It has forecast growth above 40% for 2013 to $385m (€299m) with EBITDA at $84.6m (€65.7m).
The global food supplements market is worth €36m in 2011, according to Euromonitor International.