Florida Firm Buys Met-Rx Nutrition for $78 Million

A leading maker of vitamins and herbal supplements said Wednesday that it will pay $78 million to acquire Met-Rx Nutrition Inc., the Irvine nutrition company accused of failing to disclose the health risks of testosterone boosters like those formerly used by slugger Mark McGwire.

Rexall Sundown Inc. in Boca Raton, Fla., said the transaction, part of a strategy to broaden its products, is expected to boost its earnings next year. As part of the deal, to close in mid-January, Rexall will repay $30 million in Met-Rx debt.

Met-Rx will retain its name and operate as a subsidiary of Rexall. There are no immediate plans to eliminate any of the company’s 140 jobs in Orange County, and the payroll may even expand, said Len Moskovits, Met-Rx’s chief executive. Founder A. Scott Connelly will stay on as Met-Rx’s chairman.

In a news release, the companies said Met-Rx has been growing at a 30% annual pace and will sell $105 million worth of nutrition bars, protein powders and other products this year.

Rexall’s large sales and marketing staff will help Met-Rx grow faster, Moskovits said. The companies have complementary strengths, he said. Much of Met-Rx’s sales are from health-food stores and fitness centers, while Rexall Sundown has a greater presence in groceries and drug- and discount stores.

“Our motivation was finding a powerful strategic partner,” Moskovits said. “This was the perfect fit.”

Met-Rx says a key ingredient in its products, a protein mix it calls Metamyosyn, increases the body’s ability to build lean muscle.

It attracted more attention, however, when the Federal Trade Commission accused it of making unproven claims that products containing androstenedione, a hormone-like substance banned as a steroid by some athletic organizations, could increase users’ muscle mass and libido with few or no side effects.

In a November settlement, Met-Rx pledged to disclose side effects such as enlarged breasts, testicle shrinkage and infertility.

Andro and similar substances became the hottest products in the $1.4-billion sports-nutrition industry in 1998 when McGwire acknowledged using them during his record 70-homer season. Although major league baseball permits players to use the substances, McGwire has since said he no longer takes andro.

Manufacturers contend andro is a natural adrenal hormone found in meat and plants and is converted in the liver to testosterone, which is used in muscle production. But some sports doctors say it is a steroid, and it has been banned in Canada and by the National Football League, the National Collegiate Athletic Assn. and the International Olympic Committee.

Rexall Sundown recently told investors it had captured 12.9% of the national market for its vitamins and herbal preparations. It has said it wants to expand into the sports-nutrition business and increase its distribution in the health-food and natural-food sectors.

Rexall turned a $60-million profit in the year that ended Aug. 31, down 13%, but its sales were up 12% at $596 million. Its chief executive, Damon DeSantis, attributed the lower earnings to a slowdown in the industry’s previously muscular growth rate, along with the company’s doubling of advertising spending and heavy investment in manufacturing and distribution.