Nutritional supplement giant Herbalife International has entered into a definitive merger agreement providing for its acquisition by private equity firms Whitney & Co., and Golden Gate Capital. The transaction is valued at approximately US$685m.
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The merger agreement calls for each holder of Class A and Class B Common Stock to receive US$19.50 per share in cash, representing a premium of approximately 26.7% to holders of Class A Common Stock (10 April 2002 closing price of US$15.389) and a premium of approximately 35.4% to holders of Class B Common Stock (10 April 2002 closing price of US$14.40).
The company’s charter requires in the event of a merger that holders of Class B Common Stock be entitled to receive the same per share consideration as the per share consideration received by holders of Class A Common Stock.
Frank Tirelli, president and CEO of Herbalife said: “We believe the decision by two such high quality firms as Whitney and Golden Gate Capital to acquire Herbalife not only provides an excellent return to our stockholders, but benefits the company, its distributors and its employees as well. The merger provides a solid foundation with committed, long-term investors dedicated to the future success of Herbalife.
“As a private company Herbalife will be able to focus all of its resources on its mission of improving peoples’ lives by promoting wellness and health,” Tirelli said. “We are confident that with the support of Whitney and Golden Gate Capital, the company will be able to further solidify its leadership position in the US$50bn per year wellness industry.”
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By GlobalDataTirelli said that Herbalife management looks forward to working with the Whitney and Golden Gate Capital acquisition team.
The company’s Board of Directors approved the transaction following receipt of the unanimous recommendation of a Special Committee comprised of independent directors. The board and Special Committee received the opinions of Barrington Associates and Morgan Stanley & Co. that the consideration to be paid to stockholders is fair from a financial point of view.
“Herbalife has always distinguished itself as being responsive to distributor needs as it brings to consumers outstanding health and wellness products under a great brand,” said Peter Castleman, chairman & managing partner of Whitney & Co: “We are excited to partner with management and key distributors to invest in Herbalife’s future.”
Jesse Rogers, MD, Golden Gate Capital, added: “Herbalife is a solid company with a professional management team, a wealth of distributors worldwide, and a loyal customer base.
“Under the direction of this management team, we believe it is possible to create new and greater opportunities for the company’s distributors, while also managing the company more effectively.”
Completion of the transaction is subject to customary closing conditions including approval by the stockholders of Class A stock and the securing of regulatory approvals. Whitney and Golden Gate have committed equity financing and have received debt-financing commitments in connection with the transaction. The transaction is expected to close in the late Q2 or early Q3 2002.
