Glanbia announces €200m purchase of US protein bar manufacturer thinkThin

Glanbia has said it has “significant” available debt facilities for further acquisitions, after reaching agreement to buy a leading US protein bar manufacturer for $217 million (€203m).

Shares in the Kilkenny-headquartered diversified dairy and food ingredients/nutrition business rose by nearly 3% yesterday, to €17.50 (although the share price finally closed slightly lower at €17.32), after it announced its intended purchase of California-based company, thinkThin.

The company makes a leading range of protein-enriched bars targeted at lifestyle consumers (mainly women) and sells through mass retail channels in the US.

The deal, which requires regulatory approval, but is expected to concluded before the end of the year, is expected to be earnings enhancing next year, for Glanbia.

The Irish group will fund this acquisition via existing debt facilities and a spokesperson said, yesterday, that the business has “significant” available facilities to fund further acquisitions, “should the need arise”.

TSG Consumer is exiting @thinkproducts to @GlanbiaPlc, as protein drives deals https://t.co/ebmnEQAYNC pic.twitter.com/BzS6B6oBtA

— Mergers&Acquisitions (@TheMiddleMarket) November 16, 2015

The thinkThin purchase follows on from Glanbia’s $153m takeover of US sports nutrition firm, Isopure last year.

However, this opens the Kilkenny firm to a much broader distribution reach within the $2.8bn protein bar retail market in the US.

“It [thinkThin] also plays into the snacking trend, in the US the number of people snacking at least three times per day has increased from 21% in 2010 to 51% in 2014,” Liam Igoe of Goodbody Stockbrokers said.

“The acquisition of thinkThin bars fills in a white sport in Glanbia’s Global Nutrition offering. The acquisition price of 2.6 times sales seems to discount that growth will continue at a high pace,” Rabobank Research added.

The US firm had net sales for the 12 months to the end of September of $84m, and has seen compound average growth for the past three years of 31%.

Glanbia’s group managing director, Siobhan Talbot said the latest acquisition represents “an excellent strategic addition” to the group’s portfolio of market-leading performance nutrition brands.

“The transaction is firmly aligned with our overall growth ambitions and positions us well in the fast-growing nutrition bar category as well as being value-enhancing for our shareholders,” she added.

“The acquisition multiple is not cheap but reflects the brand’s strong position in what is a fast-growing market,” noted Jack Gorman of Davy Stockbrokers.