Published: August 19, 2009
Former Country Life Vitamins Executive Seeks to Acquire Nutraceutical International Corp.
LOS ANGELES - (BUSINESS WIRE) - Ryan Drexler, a former senior executive and equity owner of
market-leading Country Life Vitamins and holder of 341,000 shares, or
3.1% of the outstanding common stock of Nutraceutical International
Corp. (NasdaqGS: NUTR), today announced his proposal to acquire all of
the outstanding shares of Nutraceutical International Corp. (NasdaqGS:
NUTR) in a negotiated all-cash transaction of $10.75 per share.
In his letter to the Board, Mr. Drexler wrote: "…I believe the company
is sorely underperforming and in dire need of management direction and
expertise. Twice before I have reached out to the board in an effort to
find a mutually beneficial path toward unlocking value for all
Nutraceutical shareholders and twice before I have received cursory
rejections. This is in spite of the fact, known to management, that I
personally have a long track record of success as an executive and
equity owner in the nutritional supplement and natural product industry.
"I am reaffirming in this letter that I am prepared to immediately
negotiate an all-cash transaction at $10.75 per share, the price that I
previously proposed to the board, which could possibly be increased
following completion of due diligence. This proposal allows holders to
immediately realize value in what is currently an illiquid holding. I
encourage the board to support my proposal as what it is: in the best
interest of Nutraceutical shareholders, customers and employees."
Prior to selling his family company to Kikkoman Corporation in 2007,
Drexler spent 15 years as a senior executive at Country Life, where he
successfully created new brands, developed strategic objectives and led
acquisitions. Country Life is a market leader in the nutritional
supplements and natural products industry.
Mr. Drexler's Tuesday letter to the Nutraceutical Board of Directors
follows:
August 18, 2009
Board of Directors
Nutraceutical International Corp.
1400
Kearns Boulevard, Second Floor
Park City, Utah 84060
Gentlemen:
As owner of approximately 341,000 shares, or 3.1% of the outstanding
common stock, of Nutraceutical International Corp. ("Nutraceutical" or
the "Company" ), I believe the company is sorely underperforming and in
dire need of management direction and expertise.
Twice before I have reached out to the board in an effort to find a
mutually beneficial path toward unlocking value for all
Nutraceutical shareholders and twice before I have received cursory
rejections. This is in spite of the fact, known to management, that I
personally have a long track record of success as an executive and
equity owner in the nutritional supplement and natural product industry.
I am reaffirming in this letter that I am prepared to immediately
negotiate an all-cash transaction at $10.75 per share, the price that I
previously proposed to the board, which could possibly be increased
following completion of due diligence. This proposal allows holders to
immediately realize value in what is currently an illiquid holding. I
encourage the board to support my proposal as what it is: in the best
interest of Nutraceutical shareholders, customers and employees.
As previously noted, a substantial portion of the equity to finance this
transaction will come from me personally - a sign of my belief in
Nutraceutical's long-term potential under the right leadership and
oversight. The remainder of the transaction will be funded through other
sources of equity and debt, for which I have received preliminary
indications of interest.
The nutritional supplement and natural product industry faces many
challenges in the current economic climate. In order to successfully
compete, the company must be managed to its full potential, something I
strongly believe is not being done now. For example:
-
Despite more than 20 acquisitions by Nutraceutical over the past
decade, a single brand comprises 65% of the company's annual sales -
and just four of the company's 29 brands account for 92% of sales;
-
Revenues grew just 12.6% from the 2005 fiscal year to the 2008 fiscal
year - a period when the overall market for nutritional supplements
and natural products rose 32%;
-
Although the stock price has risen since my initial private offer in
July - and the company is embarking on a buyback program -
Nutraceutical shares still trade at less than half their 2004 peak.
Nutraceutical has the opportunity to increase revenue by more
effectively nurturing and developing its range of brands and products.
Instead, Nutraceutical management has grown overall sales simply by
acquiring smaller competitors - essentially buying revenue. Even then,
its track record has been less than stellar as individual brand revenues
have fallen dramatically following their absorption into Nutraceutical.
As a senior executive and equity owner of Nutraceutical competitor and
industry leader Consac Industries, Inc. (also known as Country Life
Vitamins), I developed and implemented new brands and oversaw an
acquisition program that allowed products under our umbrella to find new
customers and flourish. I left Consac in 2007 only after my family
successfully sold it to Kikkoman Corp.
I am pleased to make this proposal for the benefit of all my fellow
shareholders and I believe they will find it attractive. I am committed
to completing this transaction and hope that the Board of Nutraceutical
will work cooperatively to conclude a transaction that is in the best
interest of all shareholders.
Very truly yours,
By: /s/ Ryan Drexler
Ryan
Drexler
The full text of the letters referred to above is as follows:
July 2, 2009
Board of Directors
Nutraceutical International Corporation
1400
Kearns Boulevard, 2nd Floor
Park City, Utah 84060
Gentlemen:
I am writing to you to open a dialogue regarding the ways in which
Nutraceutical International Corporation ("Nutraceutical" or the
"Company" ) and its stockholders may be able to receive fair value for
their shares in an unstable market environment. I believe that the
nutritional supplement and natural product industry face a difficult
situation due to the economy and continued challenging and volatile
financial markets. I believe that based on my unique expertise and
background, I can improve the performance of the Company and take the
Company on a new course.
I regret that I have been unable to make contact with Mr. Gay, despite
many attempts, in order to discuss my ideas and plans. I feel that my
ideas and the opportunities at hand are compelling, and therefore I am
presenting them to you in this letter.
As you may know, I have been immersed in the nutritional supplement and
natural product industry for my entire career, having been a senior
executive and equity owner in the industry for over 15 years. I was
President of Consac Industries, Inc., also known as Country Life
Vitamins, a market leader in this industry. I left the company only
after we successfully sold to Kikkoman Corporation in 2007. While I was
involved in all aspects of the operations of Country Life, in particular
I developed a vision for the industry founded on a belief in a holistic
approach to health, fitness, diet, and well being, as a matter of
lifestyle. In my role as a senior executive I developed and implemented
the vision, strategic goals and objectives of the company, created the
sports and fitness brands, and actively pursued our acquisition
strategy. Country Life was and is known as a successful player and a
paradigm for success in the industry. As an industry participant and
since we sold Country Life, as an interested observer and analyst, I
have developed a vision and strategy for maximizing opportunities and
value in the industry.
I have a deep respect for Nutraceutical that I am sure that you share.
At the same time I see much opportunity not yet seized. The path, I
believe, involves innovation in marketing programs and strategy,
analysis, refinement and optimization of brands, and a re-assessment of
product scope with a view to cross-selling and opportunities for
synergy. Layered, of course, on this view of industry challenges and
opportunities, are the financial markets and the difficult straits in
which Nutraceutical's stockholders find themselves. The markets in
general and for Nutraceutical in particular remain volatile. Trading in
your shares is so illiquid that quoted prices are only an illusory
reference point for your stockholders; there is no meaningful liquidity.
I am prepared to provide a definitive offer to acquire all outstanding
shares of capital stock of Nutraceutical. My advisors and I have
dedicated a substantial amount of time and resources evaluating
Nutraceutical. I believe that the current market price is substantially
indicative of a fair valuation of the Company. However, the stockholders
do not have an ability to realize such value. I am prepared to make a
full cash offer at a fair price to your stockholders.
I have identified the sources of equity and debt financing needed and
have received preliminary commitments that it is available for this
transaction.
My strong preference is to consummate the acquisition in a friendly,
collaborative manner and work with the Company and the Board of
Directors. I believe that moving quickly to negotiate and conclude the
proposed transaction is in the best interest of all parties.
I do not intend to disclose this letter or my proposal to the public at
this time. However, if we are not able to enter into a dialogue to
consider my offer, then it may become appropriate for me to evaluate
other approaches to bring this before the Nutraceutical stockholders.
I urge you to consider my proposal carefully and respond to me as soon
as possible to schedule a time and place to meet. My legal and financial
advisors are prepared to meet with the Company's advisors immediately. I
look forward to hearing from you soon.
Very truly yours,
By: /s/ Ryan Drexler
Ryan
Drexler
July 9, 2009
Ryan Drexler
RE: Your Letter Dated July 2, 2009 to our Board of Directors
Dear Mr. Drexler:
Your letter to our Board of Directors has been referred to me for a
response. While we appreciate your interest, Nutraceutical is not for
sale at this time.
Sincerely,
NUTRACEUTICAL INTERNATIONAL CORPORATION
By: /s/ Stanley E. Soper
Stanley
E. Soper
Vice President, Legal Affairs
cc: Sol Lipshitz, Anchin Capital Advisors, LLC
July 15, 2009
Board of Directors
Nutraceutical International Corporation
1400
Kearns Boulevard, 2nd Floor
Park City, Utah 84060
Gentlemen:
I was disappointed by the response I received from your legal
representative dated July 9, 2009 to my earlier letter. I am writing
this second letter to again express my seriousness with respect to
providing a definitive proposal to acquire all the outstanding shares of
the capital stock of Nutraceutical International Corporation ("Company" ).
I strongly believe the Company is not being managed to its full
potential and that, therefore, its shareholders are unable to realize
the true value of the Company. As mentioned in the previous letter, I
have over 15 years experience in this industry and successfully lead a
major competitor of the Company. I know what it takes to maximize value
in this industry. The Company, although performing well, has primarily
grown sales through acquisitions, not organically. The Company has many
underperforming products acquired via acquisitions. This is evidenced by
the fact that 92% of sales are comprised of four brands, with one brand
contributing 65% of sales. I believe that a strategically different
marketing campaign and brand awareness programs would help drive the
growth of the Company. These are just a few of the strategies I have to
maximize the Company's value through the existing brands and product
lines.
I believe it is time for the Board of Directors to consider and move
forward with a transaction that will enable the shareholders to realize
the true value of the Company. I am fully prepared to make an offer of
$10.75 per share for all the outstanding shares of the Company. As
mentioned in the previous letter, I have identified the sources of
equity and debt financing needed, and have received preliminary
commitments for this transaction. In addition, a significant amount of
the equity will be funded by me.
Again, I urge you to consider my proposal carefully; I am prepared and
willing to immediately engage in private discussions about the Company,
its strategy and potential transactions that would unlock value for the
shareholders. However, because of the great importance that I place on
this opportunity - not just for me, but for all the shareholders, I am
prepared as a next step to take my proposal directly to the public
shareholders of the Company. I ask you to respond to me within the next
five business days from the date of this letter.
Very truly yours,
Ryan Drexler
July 28, 2009
Ryan Drexler
RE: Your Letter Dated July 15, 2009 to our Board of Directors
Dear Mr. Drexler:
The Board of Directors of Nutraceutical International Corporation, with
the assistance of its financial and legal advisors, has carefully
considered your unsolicited proposal to acquire Nutraceutical. They
unanimously concluded that your proposal is not in the best interests of
Nutraceutical's stockholders.
Sincerely,
NUTRACEUTICAL INTERNATIONAL CORPORATION
By: /s/ Stanley E. Soper
Stanley
E. Soper
Vice President, Legal Affairs
cc: Sol Lipshitz, Anchin Capital Advisors, LLC
This communication is for informational purposes only and does not
constitute an offer to buy any securities or a solicitation of any vote
or approval or a solicitation of an offer to sell any securities.
Sitrick And Company
Michael Sitrick (mike_sitrick@sitrick.com)
Aaron
Curtiss (aaron_curtiss@sitrick.com)
(310)
788-2850
Copyright © 2012, Business Wire, Inc., All rights reserved.
Copyright © 2012, NewsBlaze,
Daily News
Search News
