Orthomol up for sale with target valuation of €1bn
Cracking the Vault: In-depth article
Good morning and happy Wednesday.
TL;DR: Orthomol, a German dietary supplement company, is up for sale with a target valuation of €1bn. Owned by Nils Glagau, the sale reflects high investor interest in the health and wellness sector. However, some experts doubt Orthomol can achieve this valuation without substantial growth. Potential buyers include pharmaceutical companies, consumer goods giants, and private equity firms, each seeing different value in the brand and company.
Let’s jump in!
Orthomol Chasing a €1bn Valuation in a Hot Supplement Market
Orthomol Put Up For Sale
Orthomol has been making headlines after it was revealed that Nils Glagau, current co-owner and juror on Germany’s "Die Höhle der Löwen", is planning to sell the family business. With a reported target price of €1bn, the potential sale of Orthomol caught our attention - let’s jump in!
Orthomol: A Pillar in Nutritional Supplements
Founded in 1991 by Nils Glagau’s father, Kristian Glagau, Orthomol has developed into a notable player in the dietary supplement industry, particularly within Germany. The company is recognized for its blue-packaged products, primarily distributed through pharmacies and online platforms. Orthomol's product range covers various health-related needs, including immune support and general wellness.
In 2022, Orthomol reported revenues of €154m and a profit of €27m, with a workforce of approximately 500 employees. The company's distribution network includes pharmacies and online platforms, among others, facilitating access to its products. These factors have positioned Orthomol as a relevant player in the dietary supplement market.
Market Conditions: High Valuations and Investor Interest
The dietary supplement industry is currently experiencing high valuations, fueled by increased investor interest in health and wellness products. A recent example is the sale of Sunday Natural to CVC for €800m. The company’s EBITDA of approximately €50m implies an EBITDA multiple of ~15x, reflecting the willingness to pay for established brands with growth potential in the sector.
Since Orthomol's latest financials aren't public, we are required to make some assumptions. Assuming a similar EBITDA multiple will be achieved, Orthomol would need an EBITDA of €60m to €70m to justify the targeted €1bn valuation. Given Orthomol’s estimated EBITDA of €35m to €40m in 2022, this would require a significant boost in growth and profitability or a strong case for future growth to attract buyers at that valuation.
However, some industry experts are doubtful that Orthomol can achieve the same valuation levels as Sunday Natural. While the market remains favorable, there is skepticism about whether Orthomol's €1bn target is realistic. Although Orthomol is well-positioned in the supplements market, reaching this ambitious valuation may be challenging without substantial growth or strategic enhancements.
Potential Buyers: Who Could Be Interested?
Valuation aside, several industries could be interested in acquiring Orthomol, each with its own strategic motivations:
Pharmaceutical Companies
Pharmaceutical companies are increasingly looking to diversify their portfolio by entering the health and wellness sector. Dietary supplements with strong brand recognition, represent an attractive growth opportunity. Acquiring Orthomol could allow pharmaceutical companies to expand their consumer health division, leveraging existing distribution networks and expertise in healthcare. Potential contenders in this space could include Stada Arzneimittel (undergoing a sales process itself), which has a history of acquiring health and wellness brands, or pharmaceutical players like Bayer (excl. debt and litigation issues), complementing its "One-a-Day” product line.
Consumer Goods Companies
Fast-Moving Consumer Goods (FMCG) companies are also expanding into the health and wellness market as consumers increasingly seek products that promote well-being. For these companies, acquiring a well-established supplement brand like Orthomol could provide a strategic entry point into a high-growth sector. Companies such as Nestlé, which has been actively expanding its health science division, or Unilever, known for its broad consumer product portfolio, might see Orthomol as a valuable addition that complements their existing brands.
Financial Investors
Private equity firms and other financial investors are always on the lookout for strong, profitable businesses with potential for growth. Orthomol’s established brand and consistent profitability could make it an attractive target for financial investors looking to invest in the growing health and wellness market. Given the recent trend of high valuations in this sector, private equity firms such as CVC (Sunday Natural), L Catterton (Thorne Group), Blackstone (Alinamin sold earlier this year), or WM Partners (Allergy Research Group) might be interested in acquiring Orthomol, aiming to scale the business further and eventually exit at a higher valuation.
Strategic Implications of the Sale
For Orthomol, a sale could bring about new opportunities for expansion and innovation, especially if it becomes part of a larger conglomerate or private equity investor with more resources. For Nils Glagau, selling the company might lead to a significant shift, both in terms of his role and in the legacy of the family business. The sale will determine the financial future of Orthomol but also its strategic direction in the evolving health and wellness market.
What Lies Ahead
As the bidding process will get underway, the outcome will be closely watched by industry observers and potential buyers alike. Whether Orthomol achieves its ambitious valuation or not, the sale will undoubtedly have a significant impact on the company’s future and on the competitive landscape of the dietary supplement industry. The coming weeks will tell…
Until next time, stay curious!