The world’s largest food and beverage company Nestle agreed to buy vitamin maker Bountiful Company for $5.75 billion. The deal is hoping to be completed during the second half of this year.
“This acquisition complements our existing health and nutrition portfolio in terms of brands and channels,” said Greg Behar, the CEO of Nestle Health Science. Behar added, “the purchase — from private equity firms KKR & Co. and Carlyle — should double e-commerce revenue from supplements to about $1 billion this year”.
The value of the amount that Nestle will be paying is 3.1 times the value of Bountiful’s sales for the brands. It is equal to a multiple of 16.8 times of their earnings before interest before tax, depreciation, and amortization (EBITDA).
The strategy from CEO has delivered Nestle a sales growth at double the pace analysts predicted. It is set to position as a world leader in the field of minerals and supplements as the pandemic brings demand for pills for health-conscious people.
About 91% of people consuming supplements have increased consumption during the pandemic to boost the immune system, Behar said.
With that said, Nestle aims to deliver more services that recommend specific nutrients to individual consumers. The idea is similar to that of the business of Persona, a personalized vitamin company that was bought in late 2019.
In the first quarter of the year 2021, the acquired brand had sales of worth $1.87 billion, with an EBITDA margin of 18.3%. Once synergies are fully implemented by 2024, the same margin is predicted to increase above the Nestle Group average, the Swiss company said.