Leading discount supplements retailer The Vitamin Shoppe has been bought by the private equity unit of Bear Stearns merchant bank for around $300 million, according to press reports this week.
The Vitamin Shoppe, one of the largest specialty retailers and direct marketers of nutritional products in the country, opened in 1977 and currently has 120 stores in 14 states and Washington D.C. It also has a mail order service and Internet business.
New York-based private equity firm FdG Associates and co-investor J.P. Morgan Partners purchased 70 per cent of the business in 1997. Since then, the company has expanded aggressively, adding 102 stores along the East Coast and creating its leading Internet business in 1998 to complement its mail order operations. The Vitamin Shoppe has recently opened stores in the Chicago market and has plans to enter California before the end of the year.
David Gellman, managing director of FdG Associates, said: "We still strongly believe in The Vitamin Shoppe's category killer format and are excited about participating with Bear Stearns Merchant Banking and the management team as the company continues its national retail roll-out."
FdG Associates will retain a small equity interest in the company, as well as Jeffrey Horowitz, the Vitamin Shoppe's founder and CEO, and president and COO, Thomas Tolworthy.
In a report on the deal, the Wall Street Journal said that despite facing steep competition from many rivals, notably Royal Numico's General Nutrition, Vitamin Shoppe has maintained a loyal customer base through a frequent-buyer rewards program. About 65 per cent of Vitamin Shoppe's revenue comes from its retail stores.
The report added that the deal comes a week after the Bear Stearns unit agreed to buy Lerner New York & Co. from Limited Brands for $78 million.
There was also speculation from the New York Times that the sale of the business would lead to an initial offering within three years.