Switzerland's Nestle bought U.S. weight-loss company Jenny Craig for around $600 million, it said on Monday, expanding its high-margin nutrition and health business.
Jenny Craig, which according to Nestle had sales of over $400 million in the last 12 months, was founded in 1983 by weight-loss guru Jenny Craig, offering dieters prepared meals and exercise programs.
Nestle, the world's largest food company, bought the California-based company from a private equity group including ACI Capital and MidOcean Partners, it said, adding the deal would not dilute group earnings.
This acquisition will ... reinforce Nestle Nutrition's presence in the USA, the world's largest nutrition and weight management market, Nestle said in a statement.
Jenny Craig offers its products in the U.S., Canada, Australia and New Zealand.
The acquisition follows on the heels of Nestle's purchase of Australia's Uncle Tobys snacks, breakfast and soups business, making Nestle the number one in Australia's nutritious snacks market and the number two in instant soups.
Nestle is increasingly focusing on higher-margin products such as those with nutritional and health benefits. It is expanding in markets, such as the U.S., where consumers are willing to buy premium products.
The price is appropriate, said Vontobel analyst Claudia Lenz, who has an outperform rating on Nestle stock.
Nestle's nutrition division has very high growth and a good margin, so ... the acquisition is a very good step. The U.S. is a very big market for nutrition and wellness, and so it makes sense to strengthen their position there, she said.
Nestle shares were up 0.5 percent by 0736 GMT at 370.50 Swiss francs each, underperforming the Swiss blue-chip index, which had risen 0.9 percent.