Garden of Life products are sold in nearly 12,000 U.S. health food and specialty retail outlets, including major chains as well as in thousands of independent stores. The company is widely recognized throughout the fast-growing U.S. and Canadian nutritional supplement industries as a leader in innovation, efficacious and science-based products.
With annualized revenues of approximately $52 million, the company's premium high-quality products and loyal customer following have established Garden of Life as a leader in the U.S. nutritional supplements industry.
"By joining forces with Garden of Life, we strengthen Atrium's footprint in the health and nutrition industry and rapidly expand our participation in a growing market segment," said Pierre Fitzgibbon, president and CEO, Atrium. "This new distribution channel complements our strength in the healthcare professional segment. Together with our Direct to Consumer business, Atrium is well-positioned to respectively offer to each of these channels a portfolio of quality, science-based products that are specifically designed to meet our customers' needs."
Under the terms of the transaction, Atrium will pay Garden of Life an initial consideration of $35 million, $32.5 million in cash, of which $12 million is coming from the working capital, and $2.5 million in the form of newly issued common shares in Atrium. Moreover, Atrium will assume a bank debt of $2.5 million. An adjustment payment will be made at the end of fiscal year 2009. The initial purchase price is based upon a 6.5 multiple of the actual 2009 earnings before interest, taxes, depreciation and amortization ("EBITDA"). Earn-out payments have also been structured and will be based upon a percentage of incremental EBITDA in 2010 and 2011 above a minimum growth level. Manufacturing synergies will be ascribed to Atrium as they are not part of the earn-out payments and this transaction is immediately accretive.
"This acquisition offers Atrium significant opportunities for synergy and growth," said Mr. Fitzgibbon. "We will distribute our flagship product, Wobenzym, through the Garden of Life network of health food and specialty stores. In addition, over time we will begin to manufacture the majority of the Garden of Life products in Atrium's GMP manufacturing facilities. Further, by leveraging our larger critical mass, we will be able to provide more scientific support for our product offerings. Atrium has a strong track record of successfully integrating complementary businesses, delivering growth and efficiencies while preserving their successful cultures."
Jordan Rubin, CEO and founder of Garden of Life, Brian Ray, president, and the other members of the company's management team will retain their positions following this transaction.
"We are extremely excited to join a company like Atrium that shares our commitment to excellence, innovation and entrepreneurialism. I'm confident that our alliance will be highly beneficial to both companies, as well as to the steadily growing number of consumers seeking high-quality products that they can rely on to help them stay healthy," said Mr. Rubin.
"Messrs. Rubin and Ray are visionary, determined and dynamic individuals who will undoubtedly enrich our organization; we are very pleased to welcome them to our company,” Mr. Fitzgibbon added. “The Garden of Life team brings Atrium a track record of innovation and expertise in marketing in the health food and specialty store segment. Garden of Life and Atrium's U.S. business units will benefit greatly from pooling knowledge and resources to carry out business development, research and innovation initiatives."