Glanbia pays $144m for nutritional company

GLANBIA HAS stepped up its focus on the lucrative sports nutritional business with the acquisition of US nutritional company Bio-engineered Supplements and Nutrition (BSN) for $144 million (€108 million).

The acquisition of the privately held Florida-based company, which had been in the pipeline for about a year, will leave Glanbia in control of one of the largest producers of sports nutrition products in the US, and follows the Irish company’s acquisition of Optimum Nutrition in 2008.

Glanbia’s global nutritional business will represent about 22-23 per cent of the group’s overall revenue following the acquisition, generating about €600 million in revenue.

In a trading update yesterday, the company reiterated its estimate of 20 per cent growth in adjusted earnings per share (eps) for the full year. It is guiding earnings per share growth of between 11 and 13 per cent for 2011.

The expected decrease in eps in 2011 is due to a return to more normalised prices in 2010, following a particularly weak year in 2009 according to the company.

Overall, the company performed in line with expectations in the second half of 2010, Glanbia said yesterday, boosted by the strong performance of its global nutritionals business and its Dairy Ireland division, which benefited from stronger dairy markets.

However, the company’s US cheese division is expected to return a lower operating profit than in 2009 due to costs incurred through the refurbishment of its Twin Falls plant in Idaho, a weakening in US cheese prices and higher milk premiums.

Similarly, Glanbia’s consumer products division, which includes its branded milk, cheese and other dairy products, continued to be hit by falling consumer demand in the second half of the year, with the company predicting that results for this sector will be lower than 2009.

Glanbia chief executive John Moloney said yesterday the €108 million price-tag for BSN, which represented 8.3 times adjusted ebidta, was “reasonable” and was in line with the price paid for Optimum Nutrition. Glanbia had earmarked €100 million to €150 million for acquisitions this year.

Yesterday’s announcement follows the company’s acquisition of Kerry’s Limerick-based liquid milk business, Dawn Dairies, for an estimated €10 million. Mr Moloney said there may be some overlap between Optimum Nutrition and BSN, particularly on manufacturing. Glanbia already supplies BSN with whey ingredients.

The company also announced yesterday that its pension deficit for 2010 would be €49-€50 million, down from €86 million last year. As regards the defeated proposal last year to dispose of the co-op, Mr Moloney said he did not envisage a return to the issue in the “medium term” as prices continued to be reasonably good for farmers and the value of their shareholding was increasing.