Numico Sells GNC

ZOETERMEER, The Netherlands--Numico is closing the doors on its U.S. operations, as it reached an agreement to sell its final U.S. company--General Nutrition Centers Inc. (GNC)--for $750 million. While the division has been "on probation," industry expected Numico to sell GNC following its divestures of Rexall Sundown and Unicity earlier this year.

Under terms of the agreement, Apollo Management LP, a New York-based investment firm, will pay $750 million for GNC, subject to Numico shareholder approval and an "OK" from regulatory authorities. Following the sale, Numico will liquidate its U.S. operations, and anticipates a fiscal loss of approximately $1.3 billion. In addition, Numico will retain liability related to ephedra products; GNC discontinued sales of ephedra-based supplements in June 2003.

"We are convinced that selling GNC now, and thereby returning Numico to its core competencies, will maximize shareholder value as we will create a high-growth, high-margin, specialized nutrition company based on two very strong and vibrant businesses," said Jan Bennink, chief executive officer (CEO) of Numico (www.numico.com). Numico will still have operations in the baby food and clinical nutrition arenas.

Numico originally purchased GNC in August 1999 for $2.5 billion; the business was put on the block earlier this year. Numico has been reviewing offers since May, and winnowed the field to three final bids in mid-September. Reportedly, Apollo beat out NBTY, which purchased the European GNC operations in February, and the investment firm of J.W. Childs, which has two former GNC execs--including former CEO William Watts--among its partners.

GNC had been expected to sell at a depressed valuation, given its position as a turnaround business opportunity. GNC posted sales of 625 million euros ($727 million) in the first half of 2003, which Numico noted was an increase if ephedra product sales from that period were excluded from the equation.

Numico also announced its exit from the European nutritional supplements market. It will sell Vitamex AB, based in Norrkoping, Sweden, to the Swedish firm Wilh. Sonesson AB for 31 million euros ($36 million). "We view the sale of Vitamex as the last important withdrawal from the European nutritional supplements market," Bennink said. Vitamex manufactures dietary supplements sold through retail and mail order operations.