Nestlé looking to buy The Bountiful Company in move to healthcare
Analysts say they expect a price tag of $5bn to $7bn for the company that makes Nature’s Bounty vitamins
Zurich — Nestlé is in discussions to buy nutritional supplement maker The Bountiful Company, the Swiss food giant said on Monday, confirming media reports it is moving further into the health and nutrition sector, which is growing faster than packaged food.
Analysts said they expect a price tag of $5bn to $7bn for Bountiful, which makes Nature’s Bounty vitamins, Osteo Bi-Flex joint-care supplements, and Puritan’s Pride vitamins and supplements, but Nestlé gave no indication of a price in its statement.
The acquisition would fit with the M&A strategy of CEO Mark Schneider, the former Fresenius boss who has targeted several health companies since taking charge at Nestlé in 2016.
“Today, Nestlé announced that it is in discussions to acquire all or part of The Bountiful Company,” Nestlé said.
The maker of KitKat bars and Nescafé instant coffee gave no further details.
Nestlé’s approach came after Bountiful, which is majority-owned by private equity firm KKR, filed for a New York Stock Exchange flotation earlier in the month.
In 2020, Bountiful had sales of $2.07bn, 10% higher than a year earlier. It increased its adjusted earnings before interest, tax, appreciation and amortisation (ebitda) by 21% to $302.3m.
In its pre-pandemic results of 2019, meanwhile, Nestlé increased reported sales by only 1.2%, held back by sluggish performances of its water, confectionery and prepared dishes categories.
“This is about diversifying the growth profile in Nestlé and trying to get growth in areas other than coffee and pet care,” said Jean-Philippe Bertschy, an analyst at Bank Vontobel, who said a move for Bountiful made strategic sense for the world’s largest packaged food company.
In the past five years, nutrition food sales have increased by an average of 5.8% per year, faster than the 4.7% rate of packaged foods, according to Euromonitor data.
Only 17% of the estimated $137bn in annual global sales in the category are generated in Europe, the Middle East and Africa, offering scope for further expansion in the region.
Meanwhile, some 17% of Bountiful’s sales come from e-commerce, a faster growing retail channel than ordinary shops, while Nestlé could leverage its distribution and marketing to increase its sales further.
“I think the health and wellness area will continue to be the focus of Nestlé’s M&A activity, because of the faster growth and higher returns,” said Bertschy.
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