Nutrisystem Inc. (NASDAQ: NTRI) shares jumped sharply on Monday after it was announced that the firm would be acquired by Tivity Health Inc. (NASDAQ: TVTY) in a cash and stock agreement. The deal was unanimously approved by the boards of directors of both companies.
Under the terms of the agreement, Nutrisystem shareholders will receive $38.75 per share in cash and 0.2141 Tivity Health shares for each share of Nutrisystem common stock. The transaction values Nutrisystem at an enterprise value of $1.3 billion and an equity value of $1.4 billion, or roughly $47 per share.
The implied stock consideration of $8.25 per Nutrisystem share is based on the volume-weighted average price of Tivity Health’s stock for the 10 days ended December 3. The consideration is implied at $47 per share and represents a 30% premium based on the volume-weighted average price for Nutrisystem over the past five trading days.
Based on the financial results for both companies for the 12 months ended September 30, 2018, pro forma revenue would have been roughly $1.3 billion, net income would have been about $135 million and adjusted EBITDA would have been $223 million.
Donato Tramuto, Tivity Health’s CEO, commented:
The acquisition of Nutrisystem is an exciting and transformational event for Tivity Health as we expand our portfolio of healthy lifestyle brands. Tivity Health and Nutrisystem share the same mission-driven culture and have highly talented, motivated colleagues. Tivity Health has the opportunity to accelerate its already impressive growth with the addition of Nutrisystem. Our combined platform has the potential to attract new users, increase enrollment, and enhance engagement among the loyal customers and members of both companies. Many of the most common chronic conditions afflicting Americans today are associated with weight management, nutrition and physical fitness, and addressing both calories in and calories out is an important part of alleviating those conditions. Today, Tivity Health manages calories out with our SilverSneakers, Prime Fitness and flip50 programs; and Nutrisystem manages calories in with its weight loss solutions. We believe combining our two companies will create entirely new value propositions for our health plans, fitness partners, members and consumers.
Shares of Nutrisystem were last seen up 31% at $44.80, in a 52-week range of $26.06 to $55.10. The stock has a consensus analyst price target of $47.14.
Tivity traded down 21% at $32.03 a share, with a consensus price target of $45.71. The 52-week trading range is $31.22 to $44.35.