USANA buys BabyCare of China for $45 million, 400,000 shares

SALT LAKE CITY — USANA Health Sciences Inc., a Salt Lake City-based nutritional supplement marketing company, announced Monday that it has acquired BabyCare Ltd., a China-based manufacturing company that develops and sells nutritional products primarily for infants.

BabyCare operates in 21 cities, including its headquarters city of Beijing, and will become part of USANA's worldwide distribution network of 176,000 associates.

The Chinese company is shifting its marketing strategy from using only company employees to a strategy of direct selling by non-employee sales associates.

Dave Wentz, USANA's chief executive officer, said Monday that the Chinese company is a "natural fit" for USANA, because it will help the company achieve the long-term goal of becoming a household name in China. It will do so by providing local expertise, and thereby providing "the most effective way for us to enter this enormous market."

According to a USANA news release announcing the acquisition, the deal was made by acquiring Pet Lane Inc., a Delaware corporation that is the parent company of BabyCare in China. The purchase price for the shares consisted of $45 million in cash and 400,000 shares of USANA stock.

Traditionally, BabyCare has not been profitable under its retail-based business model, but transitioning to a direct-selling license by non-employees will make it so, said Jeff Yates, USANA's chief financial officer.

"With 2009 annual net sales of approximately $15 million and total assets of $19 million, this operation provides a solid platform for future growth," Yates said in the news release.

"Considering this opportunity, coupled with BabyCare's established infrastructure, experienced management team and core customer base, we expect BabyCare's sales to increase much faster than they have historically."

e-mail: jthalman@desnews.com