Nestle to devour a $600-million morsel: Jenny Craig
The Swiss company best known for chocolates continues its strategic plunge into weight management and nutrition products.
By ASSOCIATED PRESS
Published June 20, 2006
GENEVA, Switzerland - In a move that recognizes the modern world's twin obsessions - indulgence and guilt - chocolate maker Nestle said Monday it would purchase weight-loss product maker Jenny Craig Inc. for $600-million.
The acquisition follows Nestle S.A.'s purchase for around $670-million last month of Uncle Tobys, an Australian maker of nutritional cereals and snacks, and is part of the company's "continuing commitment to nutrition, health and wellness," the Swiss company said in a statement.
While best known for its namesake chocolates, the Vevey-based company also makes baby formulas, nutrition foods such as PowerBar, drinks to aid weight loss and the Lean Cuisine line. The company's purchase of Jenny Craig follows the lead of consumer products company Unilever, which bought both Ben & Jerry's ice cream and Slim Fast in 2000.
Weight management will become a new business within Nestle's nutrition unit and will reinforce its U.S. presence, the company said.
"With this strategic acquisition, the group takes another important step in its transformation process into a nutrition, health and wellness company," said Nestle chairman and chief executive Peter Brabeck-Letmathe.
"The rise of obesity and the resulting metabolic disorders, such as diabetes and cardiovascular disease, is a major public health concern, not only in the USA but also the world over," Brabeck-Letmathe said.
Jenny Craig, which has more than 3,000 employees and more than 600 centers in the United States, Canada, Australia and New Zealand, generated sales of more than $400-million in the past 12 months and achieved double-digit internal growth.
Patrik Schwendimann, analyst for Zuercher Kantonalbank, said the purchase will likely further boost the prospects of Nestle's nutrition division. Zuercher Kantonalbank and Helvea both said the purchase comes at an affordable price of 1.5 times sales.
Nestle is buying Jenny Craig from two private equity groups, ACI Capital and MidOcean Partners. The current management team of Jenny Craig, which is based in Carlsbad, Calif., will continue to run the business and report directly to Nestle.
"We are excited to be partnering with Nestle Nutrition and believe Jenny Craig will fit nicely into, and in fact complement, their portfolio of branded nutritional products and services," said Patti Larchet, CEO of Jenny Craig. "We also believe being a strategic pillar within the Nestle organization will provide us with technical, scientific and nutritional resources to further develop our program and continue to enhance our client experience and results."
The transaction is expected to close in the third quarter, the private equity firms said in a statement.
Nestle shares closed 0.7 percent higher on the Zurich exchange, at $301.59.