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    2010-03-24
    Great Hill Partners Acquires Vitacost Stake From Founder

    The Deal By Vyvyan Tenorio Boston private equity firm Great Hill Partners LLC has invested about $61 million in publicly traded Vitacost.com Inc., an online retailer of vitamins, allowing co-founder and former chief operations architect Wayne Gorsek to divest his stake in the company. The midmarket investment firm - via Great Hill Investors LLC and other affiliated funds - acquired about 5.4 million shares of common stock, amounting to a 19.7% stake, through three separate.

    The Deal
    By Vyvyan Tenorio

    Boston private equity firm Great Hill Partners LLC has invested about $61 million in publicly traded Vitacost.com Inc., an online retailer of vitamins, allowing co-founder and former chief operations architect Wayne Gorsek to divest his stake in the company.

    The midmarket investment firm - via Great Hill Investors LLC and other affiliated funds - acquired about 5.4 million shares of common stock, amounting to a 19.7% stake, through three separate privately negotiated transactions, according to a Tuesday, March 23, 13-D filing. The sellers sold at $11.25 per share, a 13% discount to Monday's $12.95 close.

    Gorsek sold roughly 4.8 million shares. Two other angel investors affiliated with Gorsek sold the bulk of the remainder.

    Great Hill partner Michael Kumin said his firm has tracked the company's progress for "over two years" and discussed the possibility of a recapitalization prior to the IPO, but those ultimately didn't pan out.

    "We liked the underlying market that Vitacost plays to," Kumin said. "There are a number of e-commerce trends that our firm has followed, in particular the shift in consumer behavior towards wellness and the aging demographics over time."

    Vitacost fit the bill well, he said. "Its financial and operating performance is at the very top of its peer group in the e-commerce sector," he added.

    The company's shares were off 27 cents from Monday's close, at $12.68 Tuesday afternoon.

    Boca Raton, Fla.-based Vitacost was launched in 1994 as a catalog retailer of third-party vitamins and dietary supplements under the name Nature's Wealth Co. It switched to Vitacost.com Inc. in 2000.

    The company has grown significantly over the past three years. It posted $191.8 million in net sales last year, compared with $143.6 million in 2008 and $99.3 million in 2007.

    Adjusted Ebitda jumped to $24.4 million in 2009 from $5.3 million in the prior year period, it said.

    Edwards Angell Palmer & Dodge LLP represented Great Hill Partners in the share transaction.