European GNCs Sold to NBTY, Letter of Intent Signed for Unicity

BOHEMIA, N.Y.--While NBTY Inc. was forthcoming about its acquisition of the Europe-based GNC stores from parent company Royal Numico N.V., both companies were tight-lipped over what this would mean for the future of the 4,500 GNCs in North America. In addition, Royal Numico announced in its fiscal (FY02) report, released March 6, that a letter of intent was signed Feb. 28 for the sale of Unicity, its direct-marketing dietary supplement division. The company also said it "feels confident" that Rexall Sundown will be sold before July 2003; a projected buyer of the supplement line was not named, though industry speculation has focused on NBTY.

Effective March 10, NBTY's Holland & Barrett Group Ltd., based in the United Kingdom, acquired Health & Diet Group Ltd. and the FSC wholesale business from Royal Numico. Health & Diet Group owns and operates 49 GNC stores in the United Kingdom and seven in Germany. The purchase price for these businesses was approximately $12 million, plus the price of FSC inventory at cost. The production facility and warehouse in Kearsley, England, were also included in the sale.

The 2002 sales for the European GNCs came to approximately $57 million; the stores employ 550 people.

"These acquisitions are part of our strategic plan to enhance NBTY's wholesale operation and further our position as the dominant force in the nutritional supplement industry," said Scott Rudolph, chairman and chief executive officer (CEO) at the company. "NBTY continues to make strategic acquisitions and remains at the forefront of the worldwide nutritional supplement industry consolidation."

Jan Bennink, CEO of Royal Numico, stated, "We are pleased to announce the sale of Health & Diet Group as a strategic step forward in the process of divesting the European supplements activities, as announced in November 2002."

In terms of the North American GNCs, Bennink said, "Notwithstanding the first positive signs we see from these various initiatives, we are not fully confident that GNC will return to acceptable sales growth and margin levels within 18 months. Therefore, we keep all possible options open for GNC."

For the year, sales at all GNCs declined 5.9 percent, while sales for Royal Numico's Rexall Sundown line dropped 21.4 percent, and Unicity experienced a sales loss of 19.4 percent.

Calls to NBTY were not returned by press time, and the public relations firm for North America GNC said it had no comment beyond what was said in the Royal Numico release.