Acquisition of BSN for $144,000,000 by Glanbia, and the potential impact on MSLP
On January 19, 2011 Irish dairy and ingredients supplier Glanbia announced its $144 million acquisition of BSN, a leading sports nutrition company. Additionally, in 2008 Glanbia acquired Optimum Nutrition, for which they paid $315 million.
Some persuasive points have been made by several investors regarding the thumb-in-the-eye to all Muscle Pharm shareholders from Brad and Cory. Even though I've been a loyal Muscle Pharm shareholder, I can't defend the deafening silence from MSLP Sr. mgmt when it comes to their shareholders. If they still believe that their strategy will eventually lead to great rewards for the shareholders, they have a number of simple, inexpensive (some even free) methods to communicate their views. They have sent at least one shareholder letter in the past, thanking the shareholders for their loyal support and for keeping the faith (I'm only paraphrasing here). So why in the world would I continue to hold my shares in MSLP, knowing I will likely continue to be kept in the dark by Muscle Pharm? Because I, just as Brad and Cory, am greedy. I would rather make money on my investment than lose money. Up till now, I have done nothing but accumulate paper loses on my MSLP investment. But the potential buyout of Muscle Pharm, while making Brad and Cory rich, would solve my paper loss problems as well. Why so, you may ask. BSN was recently bought by Glanbia for $144 million. On bodybuilding.com, the world's #1 online supplement store, BSN currently has 3 products that are Top 50 best selling. Muscle Pharm has 5 products in the same Top 50 list, and two of those 5 products have only been selling since July 2011. So, at the world's largest online supplement store, Muscle Pharm has 66% more Top 50 Best selling products than BSN, and BSN recently for $144 million. Even if Brad and Cory were handed every single MSLP share between the current shs outstanding and the authorized 750 million, and then sold Muscle Pharm to Glanbia for a fair valuation, I would stand to make quite a bit of money on my MSLP investment. Why would anyone pay a large sum of money for Muscle Pharm, since they have been diluting shares as long as they've been in existence, and booking operational losses for the same period of time? Because the moment they are acquired, those negative items disappear. The acquiring company could and would end the dilution immediately, and would have a fast growing, profitable company in their possession. I say 'profitable' because they could end spending on such things as expanding the state-of-the-art training facilities, or handing out any more Lamborghinis. Since they would be buying a (ready-to-be) profitable, rapidly growing (and hip) entity, they would likely pay a rich valuation for the company. Perhaps 3 to 5 times full year sales. I expect that Brad and Cory could sell Muscle Pharm, at this time, for between $50 and $100 million. At the low end of that range, one percent of the company would be worth $500,000, and can be owned today for under $50,000. That leaves room for shareholder profit, even with continued dilution. All information I've stated above is my opinion, and pure conjecture. I will continue to hold my MSLP shares based upon the opinion above.
AI
