Numico Sells GNC 31612

Numico Sells GNC

ZOETERMEER, The NetherlandsNumicois closing the doors on its U.S. operations, as it reached an agreement to sellits final U.S. companyGeneral Nutrition Centers Inc. (GNC)for $750million. While the division has been on probation, industry expectedNumico to sell GNC following its divestures of Rexall Sundown and Unicityearlier this year.

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

We are convinced that selling GNC now, and therebyreturning Numico to its core competencies, will maximize shareholder value as wewill create a high-growth, high-margin, specialized nutrition company based ontwo very strong and vibrant businesses, said Jan Bennink, chief executiveofficer (CEO) of Numico (www.numico.com). Numico will still have operations inthe baby food and clinical nutrition arenas.

Numico originally purchased GNC in August 1999 for $2.5billion; after years of poor sales, the business was put on the blockearlier this year. Numico has been reviewing offers since May, and winnowed thefield to three final bids in mid-September. Reportedly, Apollo beat out NBTY,which purchased the European GNC operations in February, and the investment firmof J.W. Childs, which has two former GNC execs including former CEO WilliamWattsamong its partners.

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

Numico also announced its exit from the European nutritionalsupplements market. It will sell Vitamex AB, based in Norrkping, Sweden, tothe Swedish firm Wilh. Sonesson AB for 31 million euros ($36 million). Weview the sale of Vitamex as the last important withdrawal from the Europeannutritional supplements market, Bennink said. Vitamex manufactures dietary supplements soldthrough retail and mail order operations.