Nestle In Talks To Buy The Bountiful Co. Before IPO

Swiss food giant Nestle on Monday confirmed that it was in talks to acquire “all or part of” The Bountiful Company. The maker of Nature’s Bounty vitamins is backed by private equity firm KKR & Co. and had been planning a U.S. initial public offering.

Nestle’s statement follows media speculation about such a deal, with The Wall Street Journal reporting on Friday that Nestle was looking at a mid-single-digit billion-dollar deal for The Bountiful Co.

KKR & Co. was said to have been planning an IPO valuing the firm at more than $6 billion, though an acquisition by Nestle could preempt the initial public offering, a person familiar with the matter said.

Nestle’s move comes four years after Schneider dove into the field of vitamins and supplements in his first year as CEO in 2017 with the $2.3 billion acquisition of Atrium Innovations Inc. Schneider has made more than 50 deals since he took over at the helm, disposing of lagging businesses like U.S. chocolate and mass-market bottled water, and folding Nestle’s ice cream brands into a joint venture there. He strengthened the Swiss company’s high-growth categories with smaller transactions in pet care and also splurged $7.15 billion on a deal to market Starbucks coffee products.

“This remains another example of how the company can manage via portfolio reshuffling its transition from coffee/pet to a more diverse mix in the coming years,” Citi analyst Cedric Besnard, wrote in a note.

A potential deal for Bountiful would accelerate Nestle’s strategy of buying larger brands of vitamins as it tries to gain pricing power and appeal to high-spending health-conscious consumers.

The approach has delivered, with Nestle last week reporting sales growth at double the pace analysts predicted. Supplements and minerals that boost the immune system are in high demand, and e-commerce has become an effective way to sell such products, the company said. Nestle Health Science’s revenue rose almost 10% in the first quarter on an adjusted basis.

Nestle shares have gained more than 70 percent since Schneider became CEO, and the company is worth more than $300 billion. The Shares of Nestle fell 0.8 percent in Zurich on Monday.

Bountiful sells a wide range of vitamins that are available in retail chains such as Walmart, CVS and Rite Aid. Supplements and vitamins are attractive targets during the pandemic, which has boosted demand for products that are advertised as helping consumers’ health and immune systems.

The company, whose brands also include Puritan’s Pride, filed registration documents for the listing earlier this month.

Big consumer-goods companies have increasingly been interested in the vitamins, minerals and supplements sector, and the area builds on Nestle’s desire to push more into healthy, medical nutrition and self-care trends, according to Bruno Monteyne, an analyst at Bernstein.