Muscle Milk Goes on Auction Block
Published in CSP Daily News
Family owners seeking as much as $500 million for well-known brand
BENICIA, Calif. -- The owners of Muscle Milk are looking to wean themselves off the popular protein drink. CytoSport Inc., which makes the weight-room staple along with other sports nutrition brands such as Evolve and Cytomax, have enlisted bankers with Credit Suisse Group AG to look for a buyer, people familiar with the matter told The Wall Street Journal.
CytoSport's owners, which include the family that founded the company and private-equity firm TSG Consumer Partners LLC, are hoping to fetch as much as $500 million in a sale, one of these people said. Possible buyers include big pharmaceutical firms, food makers and other consumer product companies, another person said.
It is not clear how far along the sale process is and there is no guarantee it will lead to a deal.
A price of $500 million would be a hefty multiple to CytoSport's annual earnings before interest, tax, depreciation and amortization (EBITDA) of about $30 million. The Benicia, Calif., company's annual sales have grown to about $300 million since its founding in 1998, people familiar with the company said.
TSG, CytoSport and Credit Suisse declined to comment, the newspaper said.
TSG bought a minority stake in the company in 2007. The San Francisco-based private-equity firm is invested in a number of consumer brands, such as Planet Fitness, Paige Denim and e.l.f. cosmetics. TSG in 2006 sold its 30% stake in Vitamin Water for $677 million.
CytoSport was founded by a father and son team, Greg and Michael Pickett, according to the company's website. The company launched Muscle Milk in 2000, which has since become its biggest brand. While Muscle Milk started as a protein powder, it has expanded into other categories such as protein bars, oatmeal and ready-to-drink products.
Muscle Milk is now the second-largest player in the protein-product category, said the report, with 8.8% market share in 2012, according to the Journal, citing market research firm Euromonitor International.
In June, the company tapped a new chief executive, Rob King, a former Pepsi Bottling Group executive who works as a consultant for TSG and is on multiple boards of companies the firm owns. King is the first CytoSport CEO who's not a member of the Pickett family, the report said.