Nutrition's Market Domination with the Schiff-Beckitt Merger
Josef Ray is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Schiff Nutrition International (NYSE: SHF) is known to be one of the leading companies that manufactures, develops, distributes, markets, and sells sports nutrition products, vitamins, and other nutritional supplements, under different brand names like MegaRed, Move Free, Airborne, Tiger's Milk, Digestive Advantage, and Schiff Vitamins. It offers products mainly for care for joints, immunological support, digestive health, and health of the heart. By supporting and developing new and stronger brands, and marketing high quality innovative products, the firm seeks to meet the needs and demands of customers to continue having a strong reputation in an industry where competition is fierce. Schiff hasn’t reported any major failure in its products and performance since its debut – the reason why the firm’s investment returns and gains still show positive indicators.
Schiff recently delivered a surprising 27.8% increase in its earnings for the fiscal first quarter. A significant 28.2% net income increase every year, which amounts to about $6 million, proves the company’s claim that the momentum of their financial status is constantly trending higher. Schiff has been surprising the industry for three quarters now. It surpasses most earnings estimates every time it releases earnings reports, which creates a strong impact on the market’s image of the business. Just as it exceeded the estimate of 27.8% in adjusted earnings per share, Schiff International also surpassed the 10.8% estimate to up to 46.2% in its net sales.
The company generally makes use of its different brand names, known around the world, to achieve such growth. Gross margin increased from 44.7% to 47.1% from the same quarter last year, in spite of the opposing influence caused by the purchase adjustment of Airborne, a prominent brand in the immunological support brands. Other brands of Schiff significantly grow in sales year over year as a rise to &74.8 million was reported for this quarter. The wide range of products offered by the firm in different key areas cater to consumers in the United States and around the world. Schiff’s source of revenue is obviously not concentrated in a single place, which enables it to extend its reach to other places to produce higher earnings and returns.
Because of its respectable placement in the industry, Schiff Nutrition International was able to open itself for bidding, with the largest companies in the world as the bidders. Bayer (NASDAQOTH: BAYRY) and Reckitt Benckiser (NASDAQOTH: RBGPY) vied for the best deal to finally get Schiff as their latest acquisition. Bayer offered the firm $1.2 billion with $34 per share; but Reckitt Benckiser beat Bayer’s offer with $1.4 billion as its bid. According to Beckitt, Schiff possesses ‘a strong portfolio of high quality branded business in the USA,’ which makes it worth the bid and a great factor for plans of entering the VMS market. The merger contract signed by both companies presumes a stronger hold of Schiff to the market because Reckitt’s capabilities are also strong enough to operate in the multi-billion market. Schiff shall continue to be in-service under the same name and business segments, but now with a better and even more solid reputation to lean on. Schiff projects higher gains and more clients thanks to its merger with Reckitt.
Moreover, United States expectation of an old population in the coming years shall also bring consumers to the firm for medical support. Though business is not limited in the US, it will surely affect the financial status of Schiff, being based in the country.
The wide range of products offered by Schiff can readily meet the needs of consumers from all over the world, especially now that Reckitt will enable the company to have more transactions in different nations. Continuously developing its strongest brands and creating new products to expand its ability to cater to the demands of people shall be the key for Schiff Nutrition International to achieve unrelenting success.
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