Jenny Craig sale yields 11x return

MidOcean and ACI have realised a fat profit through the sale of the weight-loss company to Swiss food maker Nestle for $600m.

ACI Capital and MidOcean Partners have agreed to sell the weight loss company Jenny Craig to Nestle for approximately $600 million (€478 million), following a recent rise in the company’s fortunes.

Jenny Craig has more than 3,000 employees in 600 centers in the US, Canada, Australia and New Zealand. The company, based in Carlsbad, California, designs nutrition and exercise programs for clients looking to lose weight. The company has seen increased success in the past year through an advertising campaign chronicling the achievements of its most high-profile client, actress Kirstie Alley. In the past 12 months the company generated sales of more than $400 million and achieved double-digit internal growth.

ACI acquired Nestle along with DB Capital Partners, the former private equity arm of Deutsche Bank, in May 2002 in a going-private transaction. DB later spun out to become MidOcean Partners, which acquired Deutsche Bank’s late-stage private equity portfolio in 2003. MidOcean was created as an independent entity in order to reduce Deutsche Bank’s exposure to private equity.

The 2002 sale finished at $5.30 a share, valuing the transaction at $115 million. MidOcean managing director Rob Sharp said 45 million of equity capital was committed in the original investment. He said that clarifying the company’s message is what led to its success.

“The Kirstie Alley campaign increased trial memberships,” he said. “Because of some brand and product confusion, people had not been trying the program as frequently as they had been before. With the Kirstie Alley campaign, Jenny Craig became much more top of mind for consumers.”

Although it is best known for making chocolates, Nestle is also the world’s largest food and drink company and makes baby formulas, nutritional foods and TV dinners. Some of the company’s more prominent health products include Powerbar and the Lean Cuisine line.

Last month Nestle purchased Uncle Toby’s, an Australian nutritional cereals and snacks company, for around $670 million. The Zurich-based company is following the lead of consumer products company Unilever, which bought Ben & Jerry’s ice cream and Slim Fast in 2000.

Jenny Craig was started in 1983 in Melbourne, Australia by Sid and Jenny Craig, and began its US operations in 1985.