GNC Said to Seek $2 Billion Sale of Company as It Pursues IPO

Bloomberg

 

GNC Holdings Inc., the vitamin and nutrition-supplement retail chain, is seeking bidders for a possible sale of the company that may fetch about $2 billion, according to three people familiar with the matter.

Goldman Sachs Group Inc. and JPMorgan Chase & Co. are helping GNC search for a buyer as well as prepare the Pittsburgh-based company for a possible initial public offering, said the people, who declined to be identified because the talks are private. The sale process, which began in recent weeks, is in the early stages, they said.

Bright Food Group Co., one of China’s largest food and dairy producers, is among companies that expressed interest in GNC and signed a confidentiality agreement, the people said. GNC and Shanghai-based Bright Food agreed this year to form a joint venture that will help GNC enter the Chinese market. GNC has more than 7,100 stores globally, adding about 400 in the past year while other retailers closed locations or limited growth.

The company, which sells store-brand vitamins and Muscle Milk protein mix, is pursuing a sale as concern about a faltering economic recovery leads companies to withdraw or postpone IPO plans. Last week, the chain filed with the U.S. Securities and Exchange Commission for a $350 million share sale. Goldman and JPMorgan are underwriting the offering.

Spokeswomen for Goldman and JPMorgan declined to comment. Greg Miller, a spokesman for GNC, and Jimmy Kiang, a financial adviser to Bright Food, also declined to comment.

GNC Owners

“GNC has had problems in the past with completing other transactions,” George Van Horn, a Chicago-based analyst with market research firm IBISWorld Inc. said in a telephone interview. Van Horn cited earnings volatility and increased competition in the nutritional industry as other potential hurdles. “Finding a price that keeps the buyer and seller happy could be difficult,” he said.

Ares Management LLC and the investment arm of the Ontario Teachers’ Pension Plan bought GNC in 2007 for $1.65 billion from private-equity fund Apollo Management LP. Apollo twice tried to take GNC public and withdrew its plans amid faltering sales and unfavorable market conditions.

GNC advisers have also reached out to private-equity funds to gauge their interest in buying the company, the people with knowledge of the matter said.

This year, almost 50 companies have delayed or withdrawn IPOs in the U.S., according to data compiled by Bloomberg. Liberty Mutual Agency Corp. was among the most recent, postponing the largest IPO of 2010 because demand was less than the company had projected. The Boston-based insurer was seeking to raise almost $1.3 billion.

Industry Sales

Bright Food is looking at acquisitions that will expand its sales outside of China and said last month it is in talks about a possible takeover of the U.K.’s United Biscuits from Blackstone Group and PAI Partners. Bright Food was outbid in July for Australian sugar refiner CSR Ltd.

GNC was founded in 1935 as General Nutrition Companies. It was a publicly traded company until 1999 and has since had owners including private-equity funds and Royal Numico NV. The chain’s largest market outside the U.S. is Mexico, where it has 352 stores.

GNC’s sales may be hurt if any of the products it makes or sells are recalled or the subject of negative publicity, according to the SEC filing. In May 2009, the Food and Drug Administration warned consumers to stop using Hydroxycut diet products, which accounted for almost 5 percent of GNC sales in 2008. The company stopped selling them. Previously, the company halted sales of products containing ephedra after an FDA ban.

GNC’s net income rose to $51.1 million in the first six months of the year from $37.4 million in the same period a year earlier, according to the company’s SEC filing. Revenue increased 5.5 percent to $920.7 million. In all of 2009, GNC posted earnings before interest, taxes, depreciation and amortization of $227.7 million on revenue of $1.71 billion.

Watching for Copycats who Steal your Business Model

USA Today

Quick, what's the name of the blanket with sleeves?

If you said Snuggie, you'd be in good company. But that wouldn't make Gary Clegg or Sean Iannuzzi very happy. Clegg created the Slanket and Iannuzzi created the Freedom Blanket before the Snuggie launch — and then they were out-marketed by Snuggie-maker Allstar Products Group.

Sure, their "functional" blankets sell, but it's the Snuggie that rose to superstardom with its wacky TVinfomercials. It's Snuggie that Jay Leno, Ellen DeGeneres and Oprah Winfrey mentioned in front of millions of TV audience members.

And as Allstar President Scott Boilen conceded during an interview on The Oprah Winfrey Show: "It's not a wholly original idea." But that didn't stop his company from reaping millions in sales off the concept.

There's a slew of Snuggie-esque stories in the business world.

It's the oft-repeated tale of an innovative firm coming out with a novel idea or a fresh take on an existing product, and then a new competitor — seeing the riches to be made on a popular product — creates a similar version.

Adam Glickman says that after he opened his first Condomania condom retail store in New York in 1991, several stores in the U.S. copied his idea, and the idea was quickly replicated in Japan, Singapore and South America. Yuen Yung, creator of customizable-sushi restaurants in Texas, says he found out earlier this month that his idea has been copied in Cincinnati.

And Jane Wyler, creator of a reusable dry cleaning bag called the Clothesnik, says she was "shocked" when her product idea was knocked off by a couple she met at a trade show where she was selling her product.

Sometimes the imitation is happenstance — it's the great-minds-think-alike phenomena. But often, it's another firm tweaking an idea or outright copying a product.

Easy to rip off ideas

In this time of technological innovation and rapid-fire manufacturing, it's easier than ever for a rival to rip off an idea, says David Kappos, director of the United States Patent and Trademark Office. "If someone sees your idea built, they will almost certainly be able to copy it and have it manufactured," he says.

The first line of defense, Kappos says, is a patent.

"If you have a great idea, you've got to protect it," he says. "If you don't protect (your ideas), it's very easy for others to legitimately take them."

The filing charge per patent is about $1,000, but individuals and small businesses are able to get a 50% discount, Kappos says. His other advice is a bit more costly to follow: He suggests that firms hire legal help with the patent filing. The fees can be stiff: "in the ballpark of $5,000 to $10,000," he says. But "It's just like preparing a will or contract or leases. Sure, you can do them yourself, but it really is better to get an attorney, if you can."

Yet, investing in patent protection doesn't mean a company can become complacent. Firms should monitor for patent infringements and be ready to dole out cease-and-desist letters, as well as lawsuits.

And even if a company secures a patent, there is always a chance that competitors can legitimately tweak a product idea then sell their own version.

It sickens Wyler that she helped a rival to replicate her idea. In 2008, she met a couple at a trade show who expressed interest in investing in her company. She was intrigued by the potential partnership and filled the husband in on business. Wyler's reusable dry cleaning bags were made of organic cotton. Soon afterward, she discovered that the couple had modified her concept to create a reusable bag made from the material polypropylene.

"I'm so naive that I didn't think people would do this to me," she says. "I told him all of my trade secrets."

Kappos' advice is that all innovative firms ask others to sign non-disclosure agreements before spilling any information. "(NDAs) are very common, and people don't react negatively to them," he says.

Another way to stay ahead of competitors is to consistently innovate, says Mark Rampolla, founder of coconut-water company Zico.

When he launched in 2004, demand for the beverage (made from the clear liquid inside young, green coconuts) was small. Now it's a huge industry that is consistently attracting more makers.

Rampolla says he's focused on the brand's core attribute — it's an all-natural body hydrator — but that he will also tinker with the marketing, packaging and other elements to stand out. The latest change: He offers plastic bottles in addition to the more-common carton that most companies fill with coconut water.

The new bottle "is a very unique offering, and that is consistent with our positioning of nature's sports drinks," he says.

Sarah and Jenifer Caplan, co-founders of the flat shoe brand FootzyRolls Luxe, also spend much time trying to keep their product line unique as rivals step onto their turf.

"We look at our market and say, 'How can we be different?' " Jenifer says.

There were few competitors when they entered the market last year with rollable ballet flats that easily fit in a handbag. But the rivalry has heated up immensely.

Their newest competitor is Dr. Scholl's. The footwear king just launched Fast Flats foldable shoes, which it markets as "a practical solution for a long day or night in heels."

Competing with the big boys

Dr. Scholl's - maker of custom orthotic inserts - deployed a large ad campaign, and stores nationwide now have large Fast Flats displays. That type of promotional footprint worries the Caplans.

"We are two girls who started this company from nowhere," Jenifer says. "We don't have the money to go out like Dr. Scholl's and do multimillion-dollar marketing campaigns."

Despite their concerns, the sisters have crafted a plan to stay one step ahead of Dr. Scholl's and other rivals. They are coming out with new styles and colors, as well as forging partnerships that can take their distribution beyond retail stores.

With so many others entering the rollable-shoe market, Sarah says that many smaller brands will likely be stomped out of business: "Only a few are going to be able to survive," she says. And, if they keep innovating, "We know that we're going to be able to."

From The Chiropractic Profession: The Hottest New Marketing Trends
Original Story Posted at DynamicChiropractic.com



As the chiropractic profession enters the dawning days of the new health care economy, emerging trends and technologies present a host of compelling strategies that savvy chiropractic marketers will adopt to ensure their practice occupies the thoughts of today’s ever-more-cost-conscious and choice-savvy health care consumer.

Branding Your Practice

Creating a brand experience has moved to the top of chiropractic marketers’ priority lists. The American Institute of Graphic Design defines brand as “a person’s perception of a product, service, or company.” That definition has nothing to do with your mission statement, logo or tag line, or the color of the walls of your reception room. Instead, a brand is defined by the perception, good or bad, that your patients or prospects have about you and your practice.

Your brand experience is made up of the cumulative impressions your current and potential patients garner from their visual, verbal and experiential encounters with your practice. This encompasses a range of intellectual, sensory and emotional connections. Some experiences are controlled, such as your office environment, how you answer the phone, your advertising, the services you deliver and your Web site. An uncontrolled – but just as important – experience is the word-of-mouth about your practice. Strong practice brands arise from consistently excellent patient experiences that combine to form a clear, differentiated overall impression of your competence, capability and level of service. Savvy marketers will look at every impression in the context of and their overall brand experience.

Service. In the new health care economy, marketing is less about what you say and more about what your target actually hears. It has become essential that you learn the needs and aspirations of your patients and provide value through each communication. Let’s get back to basics and look at the difference between features and benefits.

Most inexperienced marketers are unsure of the difference and place a lot of attention on features instead of benefits. So what’s the difference? Features talk about your practice and the services you deliver. They talk about the finer details of your practice, such as your technique, level of education, conditions treated, convenient hours or ease of parking. Most people don’t care about features. Benefits tell patients what results they can expect from chiropractic. They explain how patients will feel and about the time and money they’ll save from chiropractic care compared to the alternatives. To achieve maximum impact, you must be sure that every message sent from your practice is benefits-focused. Do your patients the service of highlighting the benefits of chiropractic.

Going green. Every day, another major company commits to a sustainable future. It’s your turn. While it may not seem like a marketing strategy at first glance, you can be sure your patients will appreciate, expect and acknowledge your green efforts. The next time the opportunity arises, take the trash from your office out to the dumpster and look at how much material is wasted. Most of us don’t realize how much recyclable garbage our practice produces every day. A “green” plan is no longer a luxury or an option for your practice. This year, expect to add a symbolic new member to your practice team, a chief green officer (CGO). It’s time to take the responsibility to educate yourself and your employees about how easy it is to save money and resources by going green.

Here are just some of the ways your office can function in a more environmentally friendly way. Set a monthly goal to consistently lower the utility bill by 2-3 percent or reduce the office supply expenses by 15-20 percent. Go through the office and replace all incandescent bulbs with compact fluorescent ones, which use less energy and last longer. By reducing paper waste in the office, you save not only money, but also some beautiful trees. Buy recycled office supplies whenever possible. Almost everything needed to run your office, from toner cartridges to paper goods to plastics, is available in recycled form and costs much less. Instead of just throwing away misprints or unneeded printed pages, use them as scratch paper around the office. Set a date by which you will make the commitment to go paperless by doing everything electronically instead of printing.

Get the Word Out

Now that you have established your brand and focus of your practice, you need to get the word out. Follow these fast-growing trends of marketing to get people talking about your practice and the services you provide:

Mobile: President Obama’s election campaign was one of the most talked about in history, not only because of the barriers it broke down in terms of race, but also because of the innovative ways in which it engaged with the electorate. In many ways, it was a turning point for mobile messaging, employing the most coordinated text-messaging, get-out-the-vote campaign in U.S. history. Mobile marketing delivers highly personalized and useful information when and where it is needed. More than 90 percent of text messages are read by the recipient, which creates the opportunity for an instant link between you and your patients.

Google “mobile messaging” and you’ll find an industry of companies that can help you implement an appointment reminder/patient messaging program that can send the text message of your choice directly to your patient’s mobile device. Be sure not to “spam” patients with nuisance messages; ensure that they opt-in to your service and do not communicate any HIPAA-protected personal health information. While still in its infancy, this up-and-coming technology deserves a closer look as mobile-phone improvements continue to create new communication and marketing opportunities.

Join the club. Not just for kids any more, 35 percent of adult Internet users now have a profile on at least one social networking site. Wise marketers will capitalize on the growing appeal of social networks like MySpace and Facebook. According to USA Today, social networking grew 93 percent from 2006 to 2008. During that time, Facebook grew 500 percent. Just as with every new communication technology, there are those who use the medium in overbearing, unwanted ways. Social networking sites are no different.

The key term here is networking; give and take. Social networking success stories have one thing in common: they’re all about the ping-pong effect. It’s you sharing information about yourself and your practice with dozens, and then perhaps hundreds, of potential patients. In turn, those people mention you to their friends. Like all worthwhile business relationships, online networks must be nurtured. Make the effort to do so, and you will reap the rewards over time.

Think narrowcasting. So, what’s narrowcasting? It’s place-based video displays that aim media messages and content at specific segments of the general public. Narrowcasting networks can be found in elevators, taxis, malls, supermarkets, gas stations, restaurants, health clubs, schools and now chiropractic practices. A recent Arbitron health club network study showed that 70 percent of members watch television while at the gym and spend an average of 40 minutes each actively watching per visit. You can turn the time your patients spend in your reception room, on adjusting or therapy tables and in your exercise suite into an educational opportunity by installing a digital information system that provides compelling, entertaining, informative programming that engages your patients while teaching them about how chiropractic can improve their lives and the lives of their friends and families.

Roll the video. Online communications are changing. Chiropractors are now sharing information about their practices using podcasts, online video and now live video streaming. With the Web evolving to also include these richer media channels, the savvy marketer must learn how to listen, understand and use the same media. Broadband penetration is 70 percent in the U.S., making streaming video a “must” marketing tool for your practice. According to eMarketer, an estimated 154 million Americans watched at least one video in 2008, and three-quarters of those told a friend about one.

Video provides you with an enormous opportunity to engage, educate and entertain your patients – the “Three E’s” of successful marketing. Chiropractors are producing specialized medical videos to help their patients get the most from their chiropractic experience. These video messages include virtual tours of the practice, welcome messages from the doctor, new-patient orientation sessions and even customized home-exercise programs, all streamed over your practice’s Web site.

Get in on the game. Gaming now permeates just about all of society, creating a fresh way to connect with patients. Millions of non-golfers are swinging virtual golf clubs in Nintendo’s Wii and playing guitar in virtual rock bands on PlayStations. Senior-citizen centers are buying Wii to entertain guests and connect with grandkids. Having fun in the workplace seems like an oxymoron. However, having fun at your practice is not only good for team-building, but also makes for more productivity. You can use gaming in the practice to give a fresh look to patient education, as you practice healthy biomechanics, and as a tool to make staff training more fun. People learn best by doing, and the opportunity for group interaction provided by gaming’s virtual environment can make the office a bit more enjoyable. It can also be used to show appreciation for work well-done. Work doesn’t have to be one big party, but a little bit can make the work day go more smoothly.

Take Action

As the pressure cooker of the economy heats up, chiropractors are well-advised to employ self-restraint to avoid the overhyped marketing opportunities that they, no doubt, will be barraged with as companies with less than the purest of motives move in to take advantage of the turmoil in the marketplace. My advice: Focus on measuring your success one satisfied patient at a time, and be an early adopter and market dominator by being the first to implement these marketing trends during the coming year.