Tivity Health Is Buying Diet Plan Company Nutrisystem in $1.3 Billion Deal

(Bloomberg) -- Tivity Health Inc., the provider of fitness and health improvement programs, is buying diet plan company Nutrisystem Inc. in a $1.3 billion cash and stock deal, people familiar with the matter said.

The transaction values Nutrisystem at about $47 a share, representing a 30 percent premium based on the volume-weighted average price over the last five trading days, said the people, who asked not to be identified because the information is private.

Tivity, which serves health plans, fitness partners and consumers, intends to incorporate Nutrisystem’s weight-loss regimens into its SilverSneakers, Prime Fitness, WholeHealth Living and flip50 programs, they said.

The merger agreement provides for Nutrisystem shareholders to get $38.75 in cash and 0.2141 shares of Tivity’s common stock, the people said. Existing Tivity investors will own about 87 percent of the combined company, with the remainder owned by current Nutrisystem shareholders.

Nutrisystem has fallen 35 percent this year and last month went ex-dividend. Nutrisystem fell 3 percent to $34.20 in New York trading Friday, while Tivity closed down 0.8 percent to at $40.61.

Tivity, with a market value of $1.6 billion, had net income excluding some items of $87 million for the year ended Sept. 30, on revenue of $593 million. Nutrisystem, with a market value of $1 billion, had a profit of $56 million on $693 million in revenue during the same period.

Tennessee-based Tivity expects to maintain all Nutrisystem brands, which include the South Beach Diet, as well as Nutrisystem’s Fort Washington, Pennsylvania, location, according to the people. Nutrisystem CEO Dawn Zier will become president and chief operating officer of Tivity, they said.

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