BSN Sells Company

BSN Sells Company
by Scott Welch

BSN Sells Company? How can this be? Well it’s in the works for a while now but the deal has finally happened. BSN has sold their company for $144 million dollars! Who’s the buyer? Well it’s not MUSCLE INSIDER magazine, it’s also none other than Glanbia who are one of the largest protein manufacturers in the world! Glanbia is an international nutritional ingredients and cheese group which is headquartered in Ireland but has divisions around the world including Canada, U.S., Europe, U.K. and Nigeria to name a few.

Optimum Nutrition Link

You may remember when I cracked the story of Glanbia acquiring Optimum Nutrition and ABB in the summer of 2008 for $315 million dollars. This at the time made perfect sense as Optimum Nutrition were one of Glanbia’s largest customers. Optimum has been in the supplement business for 24 years now and they have 4 state-of-the-art production facilities occupying over 500,000 square feet of operating space and are the only sports nutrition company to manufacture their own supplements in every product category they’re in. For the U.S. market, they also have their own distribution company which ensures that they have strong market presence and also helps them keep their costs low. It is with this combination of manufacturing and distributing their own supplements that Optimum has been able to offer high-quality products at an affordable price. They have three operating facilities located in Illinois, South Carolina and Florida (hmm, isn’t BSN also in Florida!) and my last estimate had them employing 387 people.

Here’s What The Glanbia Board Has To Say About The Purchase
The Board of Glanbia believes that the acquisition of BSN significantly enhances the Group’s Performance Nutrition portfolio and delivers further growth opportunities in this area. In particular, the acquisition:

* Builds on the Group’s scale position in the attractive, high growth, higher margin, sports nutrition sector;
* Broadens Performance Nutrition’s product portfolio into new categories and channels;
* Represents a further step change in international growth opportunities for Performance Nutrition;
* Offers innovation and new product development opportunities through combined R&D; and
* Continues to develop Glanbia in line with the Group’s international growth strategy.

Here’s What Scott Welch Has To Say About The Purchase

* Buying BSN will allow Glanbia yet another top selling sexy sports nutrition company to sell their raw protein powder to and get their costs down further. This will make it even harder for supplement companies that do not manufacturing their own protein powders to compete. This will also help stabilize the price of BSN’s protein powdered products. Price fluctuations have been a problem for all supplement companies as protein prices have been very volatile.

* This buy will allow Glanbia to consolidate their media buying for Optimum Nutrition, ABB and BSN with the various magazines and websites (let’s hope they keep MUSCLE INSIDER in mind when they do this!). Consolidation will allow for increased savings, better placement and added value and more overall power with magazines and websites. Better hope the sales reps for these magazines have not been charging BSN way too much for these pages because the folks at Glanbia will be seeing the exact price by the time you read this!

* MMA Entry – Optimum and ABB have never penetrated the MMA crowd. With BSN being the primary sponsor of the UFC, Optimum and ABB will now have all the info needed to expand into this market segment. If the BSN division is already going to the UFC Fan Expo, it’s not hard to add the Optimum and ABB crew to the trade show if they own all three! Will we see ON and ABB in the UFC? Who knows.

* New Products – Optimum Nutrition, ABB and BSN are very different companies with very different competence and brand character. This merger will allow them to plan their product launch strategies with all 3 supplement companies in mind. Glanbia has pioneered things like NOP-47 and other innovations they have not always put under the ON portfolio, having 3 companies to roll new innovations out under will only increase their chances of success in the marketplace.

* Increased Distribution US – Since Optimum Nutrition already had their their own distribution arm in the US (formerly called “Costello’s”) when they were acquired by Glanbia, this buy will allow BSN to realize additional distribution points in the US.

* International Distribution – BSN and Optimum have different contacts internationally and BSN seems to rely more heavily on Sportika Exports to get their products around the world. This merger will enhance eachothers ability to penetrate international markets. With Glanbia’s divisions in Canada, U.S., Europe, U.K. and Nigeria, they may be able to manufacturer various BSN products inside these countries thus reducing the price further and avoiding shipping from their US manufacturers to these countries. Once you’re products are inside the UK or Ireland, it is much easier to ship throughout all of Europa.

* Canadian Distribution – Since MUSCLE INSIDER is the only bodybuilding or fitness magazine only distributed in Canada and are located in Toronto, we have a better pulse on what’s going on here than our US magazine rivals. In Canada, BSN is distributed by Empire Health who have had the product line for sometime. But Optimum Nutrition and ABB recently left Upper 49th to run with KARMA. Will Glanbia consolidate the Canadian distribution to just one distributor for all 3 supplement companies or keep running with 2 separate distributors? Empire Health already distributes BSN rival Nutrabolics (along with MET-Rx and Worldwide which are mostly bar and RTD companies). But Empire Health also distributes Ultimate Nutrition which is a huge hitter in the protein powder category worldwide and whom also manufacturer many of their own products.

* Since they already own ABB (which is mostly an RTD and Bar company), expect BSN’s bar and RTD portfolio to expand.

Glanbia Trading Update and Outlook

In a separate announcement Glanbia issued a 2010 full year trading update which confirmed that 2010 adjusted earnings per share growth is expected to be approximately 20%. Inclusive of the benefits of the BSN acquisition, Glanbia is forecasting adjusted earnings per share growth for 2011 (on a constant currency basis) of 11% to 13%.

Announcing the acquisition today, John Moloney, Glanbia Group Managing Director, said:

“BSN is an excellent strategic fit with our Performance Nutrition business and adds strong brand and market positions that complement and extend our portfolio. Since the acquisition of Optimum Nutrition we have established a market leading, scale position in the attractive, high growth, global sports nutrition sector. BSN is a very exciting acquisition for us and we are pleased to welcome the BSN team to Glanbia. Global Nutritionals is now a €600 million revenue business, a position we have built organically and by acquisition in just over five years.”

About Glanbia

Glanbia plc is an international nutritional ingredients and cheese group, headquartered in Ireland. Glanbia has over 4,000 employees worldwide, including Joint Ventures and Associates. The Group has three business segments – US Cheese & Global Nutritionals, Dairy Ireland and Other Business. Glanbia also has three principal international joint ventures – Southwest Cheese in the USA, Glanbia Cheese in the UK and Nutricima in Nigeria – as well as a number of small Irish-based joint ventures and associates. Glanbia is listed on the Irish and London Stock Exchanges .

About BSN

BSN’s core demographic stems from professional athletes and bodybuilders but this consumer base is growing quickly. Key products in its range are protein powders and performance supplements. The BSN brand essence is WINNING WITH STYLE with a brand promise of cutting edge physique and performance. Key products in its range are pre-work out powders and shots, protein powders, snacks and beverages and performance supplements. BSN is a leading developer, provider and distributor of nutritional products designed for health, training, physique development and performance. BSN is headquartered in Boca Raton in Florida and employs 140 people in its operations. The business was previously privately owned. BSN was founded in 2001 and since then has become a leading US performance nutrition business. Its products are shipped to over 40,000 retail outlets in the USA and distributed in over 90 countries worldwide. BSN products and brands have won more than 30 sports nutrition awards in the last five years and this has created excellent brand awareness and product loyalty. All its products are multi-functional and apply to a wide range of lifestyles and consumers. It is a pioneer in pre-workout powders and a market leader in this category. In 2009, BSN had net revenue of US$135.4 million and earnings before interest and tax (EBIT) of US$10.1 million. Adjusted EBIT amounted to US$16.3 million. At the year-ended December 2009, BSN had gross assets of US$30.5 million. The business has delivered a good performance in 2010


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