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    Nestle in talks to buy The Bountiful Co. before IPO

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    ZURICH (Reuters) -Nestle is in discussions to buy nutritional supplement maker The Bountiful Company, the Swiss food giant said on Monday, confirming media reports it is moving further into the health and nutrition sector which is growing faster than packaged food.

    Analysts said they expect a price tag of $5 billion to $7 billion for Bountiful, which makes Nature’s Bounty vitamins, Osteo Bi-Flex joint-care supplements and Puritan’s Pride vitamins and supplements, but Nestle in its statement gave no indication of a price.

    The acquisition would fit with the M&A strategy of Chief Executive Mark Schneider, the former Fresenius boss who has targeted several health companies since taking charge at Nestle in 2016.

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    “Nestlé S.A. today announced that it is in discussions to acquire all or part of The Bountiful Company,” Nestle said.

    The maker of KitKat chocolate bars and Nescafe instant coffee gave no further details.

    Nestle’s approach came after Bountiful, which is majority-owned by private equity firm KKR Co & Inc, filed for a New York Stock Exchange flotation this month.

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    In 2020, Long Island-based Bountiful had sales of $2.07 billion, 10% higher than a year earlier. It increased its adjusted earnings before interest, tax, appreciation and amortization by 21% to $302.3 million.

    In its pre-pandemic results of 2019 meanwhile, Nestle increased reported sales only by 1.2%, held back by sluggish performances of its water, confectionary and prepared dishes categories.

    “This is about diversifying the growth profile in Nestle and trying to get growth in areas other than coffee and pet care,” said Jean-Philippe Bertschy, an analyst at Bank Vontobel, who said a move for Bountiful made strategic sense for the world’s largest packaged food company.

    In the past five years, nutrition food sales have increased by an average of 5.8% per year, faster than the 4.7% rate of packaged foods, according to Euromonitor data.

    Only 17% of the estimated $137 billion in annual global sales in the category are generated in Europe, Middle East and Africa, offering scope for further expansion in the region.

    Meanwhile some 17% of Bountiful’s sales come form e-commerce, a faster growing retail channel than ordinary shops, while Nestle could leverage its distribution and marketing to increase its sales further.

    “I think the health and wellness area will continue to be the focus of Nestle’s M&A activity, because of the faster growth and higher returns,” said Bertschy.

    (BREAKINGVIEWS-Capital Calls: Nestlé reaches for the vitamin pills:)

    (Reporting by John RevillEditing by Riham Alkousaa, John Miller and Susan Fenton)

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