July 18, 2008

Usana Not Going Private Now; Stock Up 6 Percent

By Paul Beebe, The Salt Lake Tribune

Jul. 18--Shares of Usana Health Sciences Inc. jumped 6 percent Thursday, one day after founder and CEO Myron Wentz reversed his plan to take the company private.

Gull Holdings Ltd., a group led by Wentz that owns 68 percent of Usana's shares, pulled its bid for the nutritional supplement and personal care products maker after failing to convince other investors to let go of their shares at a steep discount to previous highs.

Shares of Usana, based in West Valley City, closed Thursday at $25.77, up $1.34.

Usana traded as high as $49.48 a share in January before entering a slide that didn't end until April. A month later, Gull Holdings offered to buy the remaining shares for $26, a premium over that day's share price of $20.83. In June, the group sweetened its bid to $28 a share after running into opposition from minority shareholders and a special committee appointed by the firm's board of directors.

In a statement, Gull Holdings said it was backing away because it was clear that it would not get enough minority shareholders to part with their investments. Gull Holdings had said it wanted control of at least 90 percent the outstanding shares.

The Wentz-controlled group touted its offer as a way for minority shareholders to give up their investments at what it said was a significant premium to recent trading prices. The $26 offer on May 12 was a 39 percent improvement over the stock's 2008 on April 11, a low for the year.

"While we are disappointed that we are were not able to complete the offer, we believe that Usana shareholders have sent us a strong message about their confidence in the long-term prospects of the company," Wentz said in a statement Wednesday.

Wentz did not return a call seeking comment Thursday. But in a statement, Wentz indicated he plans to remain at the helm of Usana, which will report its second-quarter financial results on Tuesday.

"I look forward to continuing to build this wonderful company, and believe that the termination of the tender offer indicates that our minority shareholders share our view that Usana Health Sciences is currently undervalued and has tremendous long-term potential," Wentz said.

The effort Wentz undertook to buy full control of Usana's shares made sense, said Timothy Ramey, a securities analyst for D.A. Davidson and Co. in Lake Oswego, Ore. Wall Street had pushed the stock well below its actual value, which he put at $36 to $40 a share in a takeover.

"The public doesn't seem to recognize the value of the company, so it's not inappropriate for a controlling shareholder to essentially say sayonara to the public market," Ramey said.

Ramey speculated that Wentz may have spent as much as $2 million for lawyers and other expenses before ending his bid two days after a 3rd District judge granted a motion temporarily blocking the deal from being completed.

Shareholder Max Silberman sought a temporary injunction, claiming the Wentz group and Usana had failed to disclose information about the company's actual value.

[email protected]

--HEADQUARTERS: West Valley City

--FOUNDED: 1992


--WHAT IT DOES: Develops and manufactures nutritional and personal health care products sold by a network of 176,000 associates in 13 countries.

--OWNERSHIP: Wentz is Usana's largest shareholder with 51 percent of outstanding shares. A group led by Wentz owns 68 percent of the company's shares.


--52-WEEK HIGH: $49.48 on Jan. 11

--52-WEEK LOW: $18.63 on April 22

--THURSDAY CLOSE: $25.77, up $1.34


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