Target: Vitamin Shoppe Inc
Price: More than $1.4 bln market cap
The scope of a bank’s mandate is not yet clear, and Vitamin Shoppe may decide against such a move, the sources said on Monday, Oct. 20. However, the talks illustrate the retailer is trying to formulate a response to requests made by some big shareholders.
A handful of large shareholders have asked the company to consider a sale to private equity or larger rival GNC Holdings Inc, Reuters reported last month.
Shares of Vitamin Shoppe rose as much as 10 percent to $46.50 after Reuters first reported that the company may hire a bank, giving it a market capitalization of over $1.4 billion. Shares of GNC rose as much as 5 percent.
At least one unnamed activist fund has accumulated a stake in Vitamin Shoppe and has talked with board members about a potential sale.
The investor push comes after shares of North Bergen, New Jersey-based Vitamin Shoppe have fallen more than 13 percent so far this year. Chief Executive Tony Truesdale also announced plans to retire in June 2015.
Benefits of a deal between Vitamin Shoppe and GNC could include combining websites, lowering price promotions, merging back-end operations and closing a significant number of overlapping stores, according to a recent Credit Suisse research report.
Vitamin Shoppe has 659 stores throughout the U.S., Canada and Puerto Rico, selling products including vitamins, minerals, specialty supplements and sports nutrition. The chain offers 900 national brands as well as exclusive products under brands like the Vitamin Shoppe, Body Tech, True Athlete and MyTrition.
The sources asked not to be identified because the talks are private. A Vitamin Shoppe spokeswoman did not immediately respond to a request for comment.
Reporting by Olivia Oran and Greg Roumeliotis of Reuters news service in New York