Nutranext's products include multivitamins under the Rainbow Light brand, the No. 2 vitamin brand in the natural channel; specialty minerals under the Natural Vitality brand, the No. 1 anti-stress and sleep brand in the natural channel; and supplements for hair, skin and nails under the Neocell brand. The company also manufactures and markets multivitamins and specialty minerals through its direct-to-consumer business, primarily under the Stop Aging Now brand. About 90% of Nutranext sales are in the U.S.
"Adding Nutranext to our portfolio is consistent with our strategy to accelerate growth through acquisitions of leading brands in fast-growing categories with attractive gross margins and a focus on health and wellness," said Clorox Chairman and CEO Benno Dorer. "We're looking forward to leveraging our proven capabilities in brand building, including innovation and digital marketing, as well as strong partnerships in retail and e-commerce to accelerate growth of Nutranext brands."
"I am very proud of the growth we have accomplished over the last 30 years," said Jose Minski, Nutranext founder and CEO. "This growth has been possible thanks to our dedicated employees who have carried our values and mission to improve ourselves and the world around us. I am excited Nutranext is joining the Clorox family, a company distinguished by its innovation and like-minded mission of developing products that enhance the lives of consumers every day. I am confident that with Clorox, Nutranext brands are well positioned for the next phase of growth."
The Nutranext acquisition brings significant scale and breadth to Clorox's dietary supplements business. It follows the company's May 2016 acquisition of the RenewLife brand, a leader in digestive health. Clorox's brand-building capabilities and retail execution behind the RenewLife brand have led to strong growth in the e-commerce channel and expanded distribution in the retail channel.
In calendar year 2017, Nutranext generated sales of about $200 million. Clorox will pay $700 million to acquire Nutranext, with the purchase price representing about 3.5 times calendar year 2017 sales.
The company expects to fund the transaction through a combination of available cash and debt financing, while maintaining a Debt/EBITDA ratio within its target range of 2.0x to 2.5x. The transaction is subject to certain closing conditions, including customary regulatory approvals, and is expected to close in the company's fiscal fourth quarter, which ends June 30, 2018.
Clorox's preliminary estimates indicate the acquisition will dilute earnings per share by 7-11 cents in the fourth quarter of its current fiscal year, ending June 30, 2018, and by 8-12 cents in fiscal year 2019 and be accretive to earnings per share in fiscal year 2020. All estimates are based on U.S. GAAP. These estimates include the impacts from financing costs, inventory step-up charges, one-time systems and other integration expenses and intangible amortization expenses. Clorox plans to update investors on the anticipated financial impact of the Nutranext acquisition in its third-quarter earnings press release to be issued in early May 2018.