Glanbia eyes €370m bid for Muscle Milk group
Three buyers interested as TSG Consumer puts firm on the block
Published 08/12/2013 | 14:30
Glanbia is understood to be involved in a three-way shootout to buy €370m-valued US sports drink firm Cytosport.
US private equity group TSG Consumer is understood to have hired investment bank Credit Suisse to sell off the specialist nutrition firm, which makes the 'Muscle Milk' brand of sports drink. Credit Suisse was appointed to sound out potential buyers in October.
Glanbia's nutrition arm is said to be facing competition from €4bn-valued, US-listed dairy-ingredients firm Whitewave Foods and private equity owned sports nutrition outfit NBTY.
The deep-pocketed Carlyle Group controls NBTY following a $3.5bn buyout back in 2010.
The Kilkenny company declined to comment on speculation. "We are always looking out for the right fit," sources close to the company told the Sunday Independent last week. Glanbia's internal corporate finance team leads most of its buyout activity.
Cytosport is co-owned by TSG Consumer Partners and the Pickett family, which set up the business in 1998. The appointment of a new chief executive, Rob Green, last July prompted a strategic review which led to a sales process being kicked off.
TSG Consumer Partner president Chuck Esserman declined to comment on possible approaches when approached by the Sunday Independent last week.
Cytosport has had a chequered time of late, with a number of its brand ambassadors getting into trouble. American football star Aaron Hernandez, of the New England Patriots, was dropped by the firm in June, ahead of his ongoing trial for homicide. Milwaukee Brewers baseballer Ryan Braun also separated from the firm after drug allegations emerged. He subsequently appealed the findings successfully but the relationship with Cytosport was not continued.
The price tag for Cytosport is thought to be close to $500m (€370m), representing a multiple of almost 17 times earnings of €22m. Cytosport is said to have sales north of €220m. The $500m cost of Cytosport indicates a far, far higher multiple than Glanbia has paid for other players in the sector.
Glanbia has invested heavily in building up its presence in the fast-growing sports nutrition market as it taps into demand from gym-goers, sports players and bodybuilders for protein supplements.
In 2008, the Kilkenny company splashed out €215m to buy Illinois-based Optimum Nutrition. This gave Glanbia ownership of the big-selling brands 'Optimum Nutrition', 'Gold Standard 100% Whey' and 'ABB'.
Optimum Nutrition is Glanbia's highest-profile brand in the sector and the company has already signed up the likes of Ireland rugby star Rob Kearney, elite Irish triathalete Aileen Morrison and the Scottish rugby team as ambassadors or partners.
The acquisition spree continued in January 2011, with the €110m buyout of privately owned Florida firm Bio-Engineered Supplements and Nutrition. The deal was funded through Glanbia's existing banking facilities.
In July 2012, Glanbia spent another €50m to buy specialist packaging firm Aseptic Solutions. The California based firm develops high-end packaging for protein shakes, vitamin shots and fruit juices.
Last month, Glanbia finance chief Siobhan Talbot formally took over as the managing director of the €3bn-valued cheese and nutrition giant. She had been appointed managing director designate last May when long-serving managing director John Moloney announced his plans to retire.
Mark Garvey was tapped up from Sara Lee Corporation to become the Kilkenny group's new finance chief.
Talbot, described as a "formidable operator", is likely to hone Glanbia's focus on the higher margin specialist nutrition sector.