Nestlé to buy vitamin maker Atrium for US$2.3B

LONDON • Nestlé is buying Montreal vitamin-maker Atrium Innovations for US$2.3 billion, expanding its presence in consumer healthcare as it seeks to offset weakness in packaged foods.

The world’s largest packaged food company said on Tuesday it will buy the maker of vitamins, probiotics and meal replacements from a group of investors led by Permira Funds.

About 80 per cent of Atrium’s sales come from the United States, meaning there is still room to buy businesses elsewhere, such as the vitamins unit being sold by Germany’s Merck, which has a large presence in emerging markets and is also being looked at by Nestlé.

“We continue to look for opportunities in things that make sense in very disciplined fashion,” said Greg Behar, head of Nestlé Health Science, the division that will house Atrium Innovations.

Nestlé Health Science already sells nutritional products for people with specific medical conditions and has been at the forefront of Nestlé’s ambition to become a “nutrition, health and wellness” company as packaged food sales slow, amid changing tastes.

Nestlé, the maker of Gerber baby food, Purina pet food and Nescafe coffee, came under pressure this year to improve returns from activist shareholder Third Point.

The purchase of Atrium, which will have $700 million in sales this year, will add to earnings immediately, Behar said. The deal reflects comments made earlier this year by Nestlé’s new chief executive, Mark Schneider, who identified consumer health as a strategic priority.

“They’ve been trying to articulate a message around Nestlé Health Science and health and wellness f or some time,” Liberum analyst Robert Waldschmidt said. “In terms of nutrition, this makes sense.”

Atrium has seven factories in the United States, Canada, Europe and Argentina. Its biggest brand is Garden of Life supplements.

The purchase of Atrium is expected to close in the first quarter of 2018.