New firm tries its hand with Atkins

North Castle Partners has acquired Atkins Nutritional Holdings, two years after the company filed for bankruptcy under the ownership of Parthenon Capital and Goldman Sachs Capital Partners.

US firm North Castle Partners has acquired Atkins Nutritional Holdings for an undisclosed amount. The health food company makes nutrition bars, shakes and confectionary products based on a low carbohydrate regimen developed by its late founder, Robert Atkins.

Terms of the deal were not disclosed.

Parthenon Capital and Goldman Sachs Capital Partners paid $533 million for an 80 percent stake in Atkins Nutritional Holdings in October 2003, shortly after Robert Atkins died from injuries suffered during a fall. The popularity of the Atkins diet began to wane soon after, and in 2005 Atkins Nutritional Holdings filed for bankruptcy. Parthenon, which had invested 20 percent of its $750 million Parthenon Investors II fund in Atkins, took a huge hit: the Atkins write-off halved the fund’s return, according to a report in The Boston Globe, citing University of Texas endowment data.

The business emerged from bankrupcty in January 2006, and completed its turnaround early this year. At the time of North Castle's acquisition, said managing director Lou Marinaccio, the business was growing, contrary to popular belief.

“Both the industry and the company have started to show growth,” Marinaccio said. “Thirty-five to 40 percent of new dieters last year tried the Atkins diet.”

Marinaccio said his firm believes it can leverage Atkins' strong brand recognition, while upgrading its product packaging and marketing to re-establish Atkins as an effective weight management tool.

In the long run, Marinaccio said, North Castle plans to assemble a panel of six to eight experts in the medical, nutrition and weight loss fields to revamp the underlying concepts of the Atkins diet. The panel will reconsider the programme's treatment of certain healthy fats and sugars, he said. In the past, criticcs have claimed that Atkins' emphasis on high-fat, high-cholesterol foods could lead to heart problems.

A major piece of North Castle's strategy involves installing a new management team, including Monty Sharma, who was chief executive of former North Castle portfolio companies Naked Juice and active lifestyle nutrition product maker EAS. Sharma will take over as chief executive of Atkins.

“The new management team has proven its ability to build and grow businesses in both the nutrition and weight management market,” Marinaccio said.