Schiff Selling Itself to Bayer for $1.2 Billion

Leverkusen, GERMANY A subgroup of German-based giant Bayer AG has agreed to snap up Schiff Nutrition International, Inc., the vitamins and nutritional supplements company, in a $1.2 billion deal.

Schiff, based in Salt Lake City, Utah, plans to sell itself for $34 per share in cash, representing a premium of 47 percent, Bloomberg reported.

The deal brings into Bayer's portfolio a fast-growing company that reported net sales of $259 million for the one-year period ending May 31, 2012 and forecasts growth between 43 percent and 46 percent for its next fiscal year.

"The Schiff business significantly enhances our presence and position in the United States, which accounts for more over-the-counter and nutritional products sales than any other country in the world," said Dr. Marijin Dekkers, CEO of Leverkusen, Germany-based Bayer AG, in a statement.

In Schiff's first-quarter results announced last month, net sales increased 46 percent over the previous year to $85.1 million while its profit rose to $6 million from $4.7 million. The company, whose brands include MegaRed, Move Free and Airborne among others, also raised its guidance for sales growth and margins.

In a regulatory filing, Schiff disclosed it may entertain an alternative offer for 30 days under specific conditions but has agreed not to actively solicit such proposals.

The acquisition by Bayer HealthCare LLC is expected to close by the end of the year. If that occurs and some other conditions are met, several Schiff executives will receive huge cash bonuses.

Tarang Amin, the CEO, president and director of Schiff, will receive a lump-sum cash bonus of $5 million, the regulatory filing disclosed. Two other executives will each receive $450,000: Scott Milsten, senior vice president, general counsel and corporate secretary; and Jennifer Steeves-Kiss, senior vice president and chief marketing officer.

Shares of Schiff (SHF) were trading this afternoon at $23.28 on the New York Stock Exchange, a few bucks under a 52-week high ($25.36) attained the day after its first-quarter results. Of four financial firms tracking the company, two rate Schiff a "strong buy," one firm recommends a "buy" and another outfit has a "hold" rating on the stock, according to data from Zacks Investment Research.   

As often occurs with such large deals, a law firm announced it's investigating whether Schiff's directors breached their fiduciary duties by not fetching a high enough price and adequately protecting minority shareholders. Boston-based Block & Leviton, a securities law firm, pointed out that Schiff's shares have more than doubled in value this year.