The Clorox Co.(NYSE:CLX) has reached a definitive agreement to acquire Nutranext for US$700mln in cash in a deal that will expand its presence in the dietary supplements business.
Clorox said Nutranext produces dietary supplements sold through retail and e-commerce channels as well by its direct-to-consumer business. Nutranext's products include multivitamins under the Rainbow Light brand; specialty minerals under the Natural Vitality brand; and supplements for hair, skin and nails under the Neocell brand. The company also sells multivitamins and speciality minerals through its direct-to-consumer business, primarily under the Stop Aging Now brand.
Nutranext is based in Sunrise, Florida, and had sales of about US$200mln in 2017, Clorox said. About 90% of Nutranext's sales are in the US.
"Adding Nutranext to our portfolio is consistent with our strategy to accelerate growth through acquisitions of leading brands in fast-growing categories with attractive gross margins and a focus on health and wellness," Benno Dorer, Clorox chairman and CEO, said in a statement.
"We're looking forward to leveraging our proven capabilities in brand building, including innovation and digital marketing, as well as strong partnerships in retail and e-commerce to accelerate growth of Nutranext brands," he added.
Clorox said the planned acquisition of Nutranext "brings significant scale and breadth to Clorox's dietary supplements business." It would follow Clorox's May 2016 acquisition of the RenewLife brand, a line of products for digestive health. The company said its "brand-building capabilities and retail execution behind the RenewLife brand have led to strong growth in the e-commerce channel and expanded distribution in the retail channel."
Clorox said it expects to finance the Nutranext acquisition through a combination of available cash and debt. The transaction is subject to certain closing conditions, including regulatory approvals, and is expected to close in Clorox's fiscal fourth quarter, which ends June 30, 2018.
Clorox said preliminary estimates indicate the acquisition will dilute its earnings per share in the range of 7 to 11 US cents in its fiscal fourth quarter and by 8 to 12 US cents in fiscal 2019, but should be accretive to earnings per share in fiscal 2020. Those estimates include the impact of financing costs, inventory step-up charges, one-time systems and other integration expenses and intangible amortisation expenses.
Clorox plans to update investors on the anticipated financial impact of the Nutranext acquisition in its third-quarter earnings release, which is set to be issued in early May.
Jose Minski, Nutranext founder and CEO, said he is "excited Nutranext is joining the Clorox family, a company distinguished by its innovation and like-minded mission of developing products that enhance the lives of consumers every day. I am confident that with Clorox, Nutranext brands are well-positioned for the next phase of growth."