Trivest Partners recently acquired Herbal Magic Systems International, a Canadian franchisor of weight-loss clinics. Terms of the deal were undisclosed.
Trivest completed the transaction in mid-December. The firm would not reveal the purchase price, although Peter Vandenberg Jr., a partner with the firm, did say Trivest closed the transaction without a financing arrangement in place. Eventually the firm will look to support the deal with a senior debt package that amounts to roughly two-thirds of the purchase price.
In the past couple years, there have been a spate of deals from buyout shops in the healthy living/diet arena. In 2002, DB Capital Partners and ACI Capital took Jenny Craig private while Whitney & Co. and Golden Gate Capital acquired Herbalife International. Meanwhile, 2003 represented another big year for the sector, with a number of high-profile transactions, including GS Capital Partners and Parthenon Capital’s purchase of Atkins Nutritionals, Apollo Management’s buyout of General Nutrition Cos. and Sun Capital Partners’ acquisition of Elan Nutrition.
For Trivest, the Herbal Magic deal represents its continuing effort to pursue transactions in the healthcare space, an initiative that was launched in 2002 with the hiring of Barry Uphoff as director. Spara Capital was hired by Herbal Magic to find a buyer for the company and introduced the deal to Trivest at a conference in San Diego last year.
Herbal Magic controls 228 health-counseling centers across Canada and the U.S., and the company’s weight-loss program focuses on individual counseling supported by proper nutrition, exercise and Herbal Magic-branded supplements. The business has seen rapid growth, having opened more than 40 franchised centers in each of the past three years, while Herbal Magic’s revenue currently stands at about C$60 million per year, according to Vandenberg.
Part of the growth plan includes expanding geographically. “This business is attractive to us, because it has the ability to grow throughout Canada, as it has not yet moved into the Quebec market. And the company is just starting to make progress in the U.S.,” Vandenberg said. Of the 228 centers, only eight are located in the U.S., all of which operate under the Nutri Magic name.
Trivest made the Herbal Magic purchase through its $316 million Trivest Fund III, which is roughly 50% committed.