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5-Hour Energy maker plans candy bar that staves off hunger
NEW YORK |
NEW YORK (Reuters) - Building on the success of its 5-Hour Energy shot and a recent debt offering, Michigan-based Living Essentials LLC is looking at acquisitions and working to launch a low-calorie snack bar it says can stave off hunger for three hours.
The bar will have 95 calories and taste "as good as any candy you've ever had," according to Manoj Bhargava, the company's chief executive.
"It could flop, but I think it has a pretty good chance of being bigger than 5-Hour Energy," Bhargava told Reuters in an interview on Friday.
The launch is planned for the start of 2013. Bhargava declined to reveal the snack bar's name.
The company's sole product at present is 5-Hour Energy, a 2-ounce "energy shot" containing B-vitamins, amino acids and other nutrients. Sold at convenience stores and gas stations, the product is aimed at truck drivers and soccer moms.
That makes it different than Monster energy drinks, which are popular with young men, and Red Bull, which is popular at bars and nightclubs.
FROM SELLER TO BUYER
In December 2010, while speaking at a conference in New York, Bhargava said he was willing to sell 5-Hour Energy, but that it was hard to convince potential buyers of the astronomical growth rates he was predicting.
Around that time, a few players took a "cursory look," Bhargava said, but discussions never went far.
Nearly two years later, the company has annual sales at retail of about $1.2 billion to $1.3 billion and earnings before interest, tax, depreciation and amortization of about $300 million. That means the pool of potential buyers is pretty small, Bhargava said.
"It's not something that's on the radar at all," he said.
Instead, the company plans to use some of the proceeds from last month's $450 million debt offering to acquire a product or two that would fit into its distribution system.
"The product itself has to be slam-dunk," Bhargava said. "It could really be anything as long as it's consumer packaged goods and it's slam-dunk. What I don't want to do is sell nonsense because it's complementary."
In terms of size, Bhargava does not plan to spend more than half of the $450 million raised from the private placement, he said.
When asked if there were available assets that fit the bill, Bhargava said he had not started looking, since he preferred to wait until the funds were raised.
"To me, it's impolite to go out shopping with no money," Bhargava said.
(Editing by Matthew Lewis)
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