Blackmores likely to put Global Therapeutics on block as part of non-core divestment drive – industry experts

25 May 2020

Australian vitamins manufacturer Blackmores is likely to put its natural health products business Global Therapeutics on the block as part of its divestment of non-core assets, according to industry experts.The company, which has a market capitalization of about AUD 1.3bn (USD 850m), announced in February that it was seeking to divest non-core brand assets to free up resources, without specifying what could be for sale.

Australian vitamins manufacturer Blackmores is likely to put its natural health products business Global Therapeutics on the block as part of its divestment of non-core assets, according to industry experts.

 

The company, which has a market capitalization of about AUD 1.3bn (USD 850m), announced in February that it was seeking to divest non-core brand assets to free up resources, without specifying what could be for sale.

 

A private equity executive familiar with Australia’s health supplement industry said that Blackmores may try and sell Global Therapeutics, which it acquired for AUD 23m in 2016. Blackmores had a chance to grow the business unit back then, but has not really done so despite being invested in it for nearly four years, the private equity executive noted.

 

A corporate advisor said he had heard that Blackmores has hired an advisor for the Global Therapeutics divestment and started the process not long ago.

 

Global Therapeutics operates two brands: Fusion Health, which is Australia’s leading provider of Chinese herbal medicines in health food stores; and Oriental Botanicals, which offers an Australia-made range of natural health products available exclusively from pharmacies, according to Blackmores’ website.

 

The corporate advisor further noted that Fusion Health and Oriental Botanicals had not grown significantly under Blackmores.The two brands still have great potential, but just need further investment and support, the advisor added.

 

Since being bought by Blackmores and put under the company’s BioCeuticals Group segment, Global Therapeutics reported revenue of AUD 23m for FY17, an 11% increase on year. Sales were flat for FY18 and declined 3% in FY19, according to Blackmores’ annual results over the past three years.

 

Without specifying Global Therapeutics’ financials, the company said in its 1H20 results in February that overall revenue for the BioCeuticals Group segment, which also has the BioCeuticals and IsoWhey brands, was flat in the half although the BioCeuticals brands’ revenue grew 6%. EBIT in the segment declined by 11% despite flat sales, which the company attributed to higher costs in relation to a new office as well as “the performance of Global Therapeutics.”

 

Other brands

Separately, an M&A banker also suggested Blackmores could possibly look to sell IsoWhey, which includes weight management products and clinical nutrition products.

 

Although a report in The Australian earlier this month suggested that Blackmores could offload its baby formula business, the corporate advisor and a second banker said they heard that this may not be the case. The second banker noted that Blackmores values its baby formula business and likely does not want to sell this unit.

 

Any assets Blackmores is planning to divest at the moment will be small, a third banker said. The buyer universe for larger parts of the business is international, and Blackmores would be unlikely to attempt to sell any larger parts during the COVID-19 pandemic with restricted international travel, this banker explained.

 

The company said in its 1H20 update that it will further invest in Blackmores, BioCeuticals, and PAW animal health brands.

 

A Blackmores spokesperson said that the company is “not in a position to share further details at this time.”