Russia Tycoon to Buy Holland & Barrett for $2.3 Billion

Updated on
  • Fridman acquires health and wellness retailer from Carlyle
  • Deal is first retail foray by Fridman’s L1 investment vehicle

Mikhail Fridman.

Photographer: Riccardo Lugermad/Letterone

Russian billionaire Mikhail Fridman’s investment vehicle agreed to buy Holland & Barrett for about 1.8 billion pounds ($2.3 billion), gaining one of Europe’s largest health-food retail chains in its first retailing acquisition.

Fridman’s L1 Retail will acquire the business from private equity owner Carlyle Group LP, according to a statement Monday. For Carlyle, the sale marks a partial exit from Holland & Barrett owner Nature’s Bounty Co., which it acquired in 2010 for $3.8 billion including debt.

The deal demonstrates a continued appetite for retailing assets, particularly those serving the growing number of consumers using natural foods and products. Natura Cosmeticos SA this month started exclusive talks to acquire British cosmetics seller Body Shop from L’Oreal SA for 1 billion euros ($1.1 billion).

The Holland & Barrett takeover “is an indication of its view of the strength in the health retail sector despite it being perceived to be an industry struggling to remain afloat,” Jonathan Buxton, partner and head of retail at Cavendish Corporate Finance, said by e-mail.

Based in the U.K. and founded in 1870, Holland & Barrett sells more than 9,000 products targeted at the growing number of consumers seeking a healthier lifestyle. Shoppers can buy anything from nuts and seeds to a tub of tablets that are said to boost the skin’s tanning properties. The retailer, which has more than 1,150 stores in 16 countries, has posted eight years of consecutive quarterly like-for-like growth.

‘Political Cloud’

L1 Retail was set up last year by X5 Retail Group NV owner Fridman as part of his LetterOne vehicle with a goal to invest $3 billion in retail businesses across Europe and North America.

The deal for Holland & Barrett comes soon after LetterOne bowed out of a tentative agreement to buy Texas oil producer ExL Petroleum Management LLC for about $700 million over concerns the plan might meet resistance from the Committee of Foreign Investment in the U.S., the government panel that reviews deals for national security risks. The ongoing U.S. investigation into the Kremlin’s meddling in the 2016 election has cast a shadow over deals emanating from Russia.

“We consciously decided to postpone our investments in the U.S. oil sector,” Fridman told Bloomberg. “Many investors are finding the process challenging. Right now it’s overshadowed by this whole political cloud. It’s narrowing our ability to invest in the U.S. for the near future.”

L1 Retail’s bid values Holland & Barrett at 2.9 times revenue, above the median of 0.75 times for retail acquisitions made during the last 12 months, according to Bloomberg data.

Carlyle has been seeking to sell or list Nature’s Bounty on the public markets, people familiar with the matter have said. The Holland & Barrett transaction should close by September, it said in the statement.

Carlyle was advised by Goldman Sachs, Houlihan Lokey, UBS, PWC, Latham & Watkins LLP and OC&C.

(Updates with Fridman comments in eighth paragraph.)
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