UPDATE 4-Carlyle to buy supplements maker NBTY for $3.8 bln

* Offer of $55/share at 47 pct premium

* Expects deal to close by end of 2010

* Says open to superior offers over the next 35 days

* NBTY shares surge 44 percent; biggest gainer on NYSE
(Adds background, analyst comment, updates share movement)

By Shradhha Sharma

BANGALORE, July 15 (BestGrowthStock) – U.S. nutritional supplements
maker NBTY Inc (NTY.N: ) said it agreed to be bought by Carlyle
Group [CYL.UL] for $3.8 billion in one of the biggest private
equity deals so far this year.

Carlyle’s $55.00 a share cash offer represents a 47 percent
premium to NBTY’s Wednesday close. Shares of NBTY jumped as
much as 44 percent to their highest in three years, making the
stock the biggest gainer on the New York Stock Exchange on
Thursday.

The deal comes a day after reports of the company being
courted by both Carlyle and rival PE firm Blackstone Group LP
(BX.N: ) emerged. [ID:nN15170707]

The Ronkonkoma, New York-based company’s board unanimously
approved the deal. The agreement, however, has a go-shop
provision, which means NBTY can scout for superior offers.

The company — known for supplements such as Nature’s
Bounty, Solgar, Sundown, Ester C and Pure Protein — sells
vitamins, minerals, herbs, and sports drinks. [ID:nWNAB5844]

Wedbush Securities analyst Rommel Dionisio said private
equity’s interest in the company made sense as it was a leading
global vitamin company with strong free cash flow.

“The vitamin industry is a growth industry because it
caters to the aging baby boomer population … there are global
growth opportunities for the company and they could grow
through acquisitions as well,” Dionisio said.

However, he was surprised by NBTY board’s approval of the
deal.

“Frankly, that take-out multiple is so low. It is only 8
times EBITDA,” Dionisio said, adding that given the low
multiple, a higher bid from another financial or private equity
buyer was a possibility.

Recent acquisitions in the personal care space had offered
higher take-out multiples, like those of Bare Escentuals, which
was offered 11 times EBITDA, and Chattem Inc, which was 12
times EBITDA, he said.

“The stock had gotten up to $51.00 on its own in April.
They missed a quarter so the stock sold off … So it’s hardly
a premium to where they were three months ago.”

Dionisio said that the board’s hasty approval could be
motivated by the prospect of organic sales deceleration in
coming months, given difficult comparisons with the year-ago
summer and fall, when consumers flocked to vitamin purchases in
the wake of the swine flu scare.

NBTY, which has a market value of about $2.3 billion,
posted a quarterly profit in April that missed market
expectations by a wide margin, hurt by increased spending on
television advertising.

The company’s rivals include Nutraceutical International
Corp (NUTR.O: ), Perrigo (PRGO.O: ) and Schiff Nutrition
International (WNI.N: ).

As of June 6, the company had outstanding debt of about
$476.5 million.

GROWING PE APPETITE

Private equity deals, which were put on hold during the
credit crisis due lack of cheap debt, have been making a
revival.

However, private equity firms have largely restricted
dealmaking to small- to mid-sized takeovers this year. In May,
Silver Lake and Warburg Pincus agreed to buy financial data
provider Interactive Data (IDC.N: ) for $3.4 billion in cash.

Carlyle’s offer for NBTY comes a week after the private
equity firm along with co-investor Welsh, Carson, Anderson &
Stowe sold healthcare services firm MultiPlan for about $3.1
billion. [ID:nLDE6680JR]

The Carlyle Group managed $90.5 billion in assets across 67
funds as of March 31, 2010.

NBTY said the deal has been fully financed through a
combination of Carlyle Partners equity, a $13.7 billion U.S.
buyout fund and external debt financing provided by BofA
Merrill Lynch, Barclays Capital and Credit Suisse.

BofA Merrill Lynch and Centerview Partners LLC are acting
as financial advisers to NBTY, while Barclays Capital and
Credit Suisse will offer financial advice to Carlyle.
(Reporting by Shradhha Sharma in Bangalore; Editing by Vinu
Pilakkott, Saumyadeb Chakrabarty, Unnikrishnan Nair)

UPDATE 4-Carlyle to buy supplements maker NBTY for $3.8 bln