Carlyle Group struck a $3.8 billion deal on Thursday to buy U.S. nutritional supplements maker NBTY Inc , beating several other buyout firms to clinch one of the biggest private equity deals so far this year.

Carlyle's $55.00 a share cash offer, unanimously approved by the board, is a 47 percent premium to NBTY's Wednesday close and values the company at more than eight times its earnings.

Shares of NBTY jumped as much as 44 percent to their highest level in three years.

There was an auction of several private equity firms and the board of directors took what they believed to be the best offer, said CFO Harvey Kamil in an interview. We are happy that shareholders are prospering from this transaction.

The other buyout firms circling the firm included TPG Capital LP , Bain Capital, Apollo Global Management, Hellman & Friedman and Blackstone Group LP , several sources familiar with the matter said.

The deal with Carlyle includes a go-shop provision of 35 days allowing others to counterbid.

Blackstone is no longer involved or considering NBTY, however, one of those sources said.

The purchase price of Carlyle's deal is made up of $2.4 billion debt financing, of which about $1.5 billion is in bank debt and about $900 million is bonds, one of the sources said. That means the deal is financed by 63 percent debt and about 37 percent equity.

GROWTH SEEN

NBTY -- known for supplements such as Nature's Bounty, Solgar, Sundown, Ester C and Pure Protein -- sells vitamins, minerals, herbs, and sports drinks.

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

Frankly, that take-out multiple is so low. It is only eight times EBITDA, Dionisio said, adding that 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.

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 , Perrigo and Schiff Nutrition International .

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

PE APPETITE

Private equity deals, which were put on hold during the credit crisis due to 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 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.

Debt financing for Thursday's deal was provided by BofA Merrill Lynch, Barclays Capital and Credit Suisse.

BofA Merrill Lynch and Centerview Partners LLC acted as financial advisers to NBTY, while Barclays Capital and Credit Suisse advised Carlyle.

(Reporting by Shradhha Sharma in Bangalore; Editing by Saumyadeb Chakrabarty, Unnikrishnan Nair and Matthew Lewis)

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