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 The world's largest packaged food company said on Tuesday it will
buy the maker of vitamins, probiotics and meal replacements from a
group of investors led by Permira Funds.
About 80 percent of Atrium's sales come from the United States,
meaning there is still room to buy businesses elsewhere, such as the
vitamins unit being sold by Germany's Merck, which has a large
presence in emerging markets and is also being looked at by Nestle.
"We continue to look for opportunities in things that make sense in
very disciplined fashion," said Greg Behar, head of Nestle Health
Science, the division that will house Atrium Innovations.
Nestle Health Science already sells nutritional products for people
with specific medical conditions and has been at the forefront of
Nestle's ambition to become a "nutrition, health and wellness"
company as packaged food sales slow, amid changing tastes.
Nestle, the maker of Gerber baby food, Purina pet food and Nescafe
coffee came under pressure this year to improve returns from
activist shareholder Third Point. It has since announced a share
buyback, a margin target and three other small acquisitions.
The purchase of Atrium, which will have $700 million in sales this
year, will add to earnings immediately, Behar said. The deal
reflects comments made earlier this year by Nestle's new chief
executive, Mark Schneider, who identified consumer health as a
strategic priority.
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"They've been trying to articulate a message around Nestle Health
Science and health and wellness for some time," Liberum analyst
Robert Waldschmidt said. "In terms of nutrition, this makes sense."
Atrium has seven factories in the United States, Canada, Europe and
Argentina. Its biggest brand is Garden of Life supplements.
This is Nestle's fourth purchase in recent months. It announced
deals for Sweet Earth vegetarian foods and Blue Bottle coffee in
September and Chameleon Cold-Brew coffee in November.
The purchase of Atrium is expected to close in the first quarter of
2018.
Atrium was advised by Morgan Stanley, RBC Capital Markets and
William Hood & Co, a division of AXIA Capital Markets.
(Reporting by Martinne Geller; Editing by David Evans, Greg Mahlich)
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