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Vitamin Shoppe Parent Co. Going Private in $2.6B Management Buyout

Vitamin Shoppe Parent Co. Going Private in $2.6B Management Buyout

Vitamin Shoppe private
Franchise Group’s management team, including CEO Brian Kahn, are expected to lead the company post-merger

Franchise Group Inc., parent company of The Vitamin Shoppe, is set to go private through a $2.6 billion management buyout.

The announcement comes after the group received an unsolicited non-binding offer in March. The proposed merger is expected to close in the second half of 2023.

The definitive agreement, led by CEO Brian Kahn and senior management team members, also involves a consortium that includes B. Riley Financial and Irradiant Partners that sees the acquisition of approximately 64% of Franchise Group’s issued and outstanding common stock that the management group doesn’t presently own or control.

The transaction has an enterprise of approximately $2.6 million, including Franchise Group’s net debt and outstanding preferred stock.

Franchise Group common stockholders will receive $30 per share in cash under the terms of the proposed merger, representing a premium of 31.9% to Franchise Group’s unaffected closing common stock price on March 17, 2023, the last trading day before the group announced the receipt of an unsolicited proposal to acquire the company.

Kahn says the transaction will allow Franchise Group to continue its business strategy of partnering with franchisees, operators and financial institutions, while “delivering certain value to our public stockholders despite a challenging business environment.” 

Once the merger is complete, Franchise Group’s management team, including Kahn, are expected to lead the company.

Vitamin Shoppe leads the way

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In Q1 of 2023, Franchise Group reports sports nutrition accounted for approximately 55.8% of its overall sales compared to 48.9% in the first quarter of 2022. The Vitamin Shoppe sold five new franchise locations in the quarter and currently operates 699 brick-and-mortar locations, three of which are franchises.

In February, The Vitamin Shoppe announced it would enter a new era in franchising, with 234 territories available and 12 franchise locations expected to open this year.

The New Jersey-based supplement and wellness company recently celebrated 46 years in business, with nearly 70% of its revenue coming from repeat customers. The Vitamin Shoppe is also pushing into the CBD market, adding a “CBD headquarters” concept in some of its brick-and-mortar locations and online.

In addition to The Vitamin Shoppe, Franchise Group’s lines include Pet Supplies Plus, Wag N’ Wash, American Freight, Badcock Home Furniture & More, Buddy’s Home Furnishings and Sylvan Learning.

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