Reckitt Benckiser ups the ante for Schiff business with a 23.5% premium to Bayer buyout offer

SLOUGH, England — The battle for Schiff Nutrition is on. Reckitt Benckiser on Friday commenced its previously announced tender offer to acquire all of the outstanding shares of Schiff Nutrition — a provider of branded vitamins, nutrition supplements and nutrition bars in the United States and elsewhere — for $42 per share in cash, or approximately $1.4 billion.

“For Reckitt Benckiser, this acquisition would provide a powerful entryway into the large and rapidly growing $30 billion global VMS market," stated Rakesh Kapoor, RB CEO. "This market would be the largest consumer healthcare sector in which we operate. It is an ideal addition to Reckitt Benckiser’s new strategic focus in global health and hygiene, and would give us immediate scale in VMS in the USA. It also plays well to our consumer marketing, innovation and go to market capabilities.” 

Reckitt Benckiser’s offer represents a premium of 23.5% over the $34 per share transaction announced Oct. 30 by Bayer HealthCare and Schiff. Reckitt Benckiser's offer is subject to Schiff terminating their merger and related agreements with Bayer HealthCare and will expire at 9 a.m., New York City time, on Dec. 14.  

“We are confident that the VMS market drivers, notably changing demographics and increased awareness of the health and wellness benefits of VMS products, will provide significant long-term growth potential in what is currently a very fragmented market," Kapoor said. 

Bayer Healthcare in October signed a merger agreement to acquire Schiff Nutrition International, which fields several prominent supplement brands, including Digestive Advantage, MegaRed, Move Free and Airborne. Those four products accounted for 70% of all Schiff sales, noted Marijn Dekkers, Bayer CEO, during an analyst call announcing the deal. "This acquisition will strengthen Bayer's leading OTC business and complement our existing nutritionals business with well-established strong brands," he said. 

Schiff generated net sales of $259 million for its fiscal year ended May 31. On Sept. 18, Schiff announced that net sales for fiscal year 2013 were projected to grow between 43% and 46%. Expected sales growth included contributions from new products and brand building, as well as Airborne, which was acquired by Schiff on March 30.