Nutraceutical (NUTR 42.00, +14.00, +50.0%) is an integrated manufacturer, marketer, distributor and retailer of branded nutritional supplements and other natural products. It has also been grossly undervalued by the market if the premium private equity firm HGGC is paying to acquire the company is any indication.
Earlier today, it was announced that an affiliate of HGGC will purchase Nutraceutical for approximately $446 million in cash, including debt to be refinanced. That's not a large deal at all in the world of M&A transactions that get the broader market's notice, yet it should certainly stir up the nutritional supplements and natural products industry.
The offer price translates to $41.80 per share for holders of NUTR common stock, which is a whopping 49% premium over Friday's closing stock price and a 15.6% premium over NUTR's all-time high closing stock price seen in January.
The deal has been unanimously approved by Nutraceutical's board of directors and it is expected to close in the second half of 2017.
Nutraceutical will have a 60-day "go-shop" period where it can solicit other proposals, yet the company doesn't plan to communicate any information on that process unless it determines it has received a superior proposal.
Strikingly, NUTR shares are trading above the offer price in the early-going, suggesting there is an air of optimism that it might receive a higher bid.
Competitors like GNC (GNC 7.69, +0.41, +5.7%) and Vitamin Shoppe (VSI 12.25, +0.35, +2.9%) can only hope so, as it would seemingly help lift their depressed valuations.
Nutraceutical also competes with the likes of Hain Celestial (HAIN 37.57, +0.36, +1.0%) in the Natural Products Market, and faces private label competition from other companies like Whole Foods (WFM 36.06, +0.07, +0.2%), which has also been rumored to be a takeover target, Sprouts Farmers Market (SFM 24.17, +0.10, +0.4%), and Natural Grocers (NGVC 9.68, +0.22, +2.4%).
Whether a higher bid comes into play remains to be seen. What is clear today, however, is that shareholders stand to benefit handsomely whether a competing offer comes or not.