A handful of large shareholders are calling on nutritional supplement retailer Vitamin Shoppe Inc (VSI.N) to consider a sale to private equity or larger rival GNC Holdings Inc (GNC.N), according to people familiar with the matter.
At least one activist fund has accumulated a position and has held conversations with members of the Vitamin Shoppe board about a potential sale, the people said, asking not to be named because the matter is not public. It is considering whether to go public with its push, the people added.
Vitamin Shoppe is the latest retailer being targeted by activist investors, who are also pushing for the sale of companies like Petsmart Inc (PETM.O) and Ann Inc (ANN.N).
The investor push comes after shares of North Bergen, New Jersey-based Vitamin Shoppe have fallen over 16 percent so far this year to a market capitalization of around $1.3 billion. Chief Executive Tony Truesdale also announced plans to retire in June 2015.
Shares of Vitamin Shoppe jumped as much as 7.6 percent on news of the investor push, and ended 4.8 percent higher at $45.44. Shares of GNC also rose 4.9 percent to $41.02, valuing the company at $3.7 billion.
A spokeswoman for Vitamin Shoppe could not be reached for comment.
Benefits of a deal between Vitamin Shoppe and GNC could include combining websites, lowering price promotions, merging back-end operations and closing a significant number of overlapping stores, according to a recent Credit Suisse research report.
“Overall, we see significant manufacturing and franchise opportunities between these two names in a merger,” the report said, also noting there was little risk of antitrust concerns in a potential merger as combined market share of the two companies represented just 8.7 percent as of last year. Vitamin Shoppe said in August that second-quarter profit had fallen 7 percent compared to the same period a year prior.
GNC also announced plans in August to name a new CEO, Michael Archbold, who is a former chief operating officer of Vitamin Shoppe.
Vitamin Shoppe has 659 stores throughout the U.S., Canada and Puerto Rico, selling products including vitamins, minerals, specialty supplements and sports nutrition. The chain offers 900 national brands as well as exclusive products under brands like the Vitamin Shoppe, Body Tech, True Athlete and MyTrition.
It acquired nutritional products maker Nutri-Force Nutrition for $85 million earlier this year.
GNC, meanwhile, has over 8,700 retail locations, including both company-owned and franchise stores where it sells vitamins, minerals and herbal supplement products.
(Reporting by Olivia Oran and Jessica Toonkel in New York; Editing by Soyoung Kim and Meredith Mazzilli)