Phillips International sells off Phillips Health to two private equity investment firms.

ACI Capital Co. Inc. and American Securities Capital Partners LLC (ASCP), both New York-based private equity investment firms, recently completed the acquisition of a majority of the assets of Phillips Health LLC in partnership with the company's existing management.

Phillips Health was a division of Phillips International Inc., founded in 1974 by Thomas L. Phillips. The division is a leading publisher of consumer health newsletters and marketer of nutritional supplements and related health products (whose revenues are reportedly higher than the newsletters themselves).

The transaction follows Phillips' sale of Phillips Business International Inc. (PBI--see related story this issue), the business-to-business division of the company.

(Contrary to a phrase in the last issue of NL/NL that Phillips currently publishes "dozens of consumer and b-to-b titles," Phillips now publishes only consumer newsletters--and, with the sale of Phillips Health, those newsletters are now exclusively investment advisories.)

The six newsletters, which Phillips management calls "platform brands," are edited by, and carry the names of, health experts with backgrounds in cardiology, women's health, internal medicine, and other disciplines. They "share the company's core commitment to effective health advice and products and consumer education," said John Farley, PII's corporate vice president for communications.

Phillips Health generates approximately $180 million in annual revenue. The terms of its sale to ACI Capital and ASCP were not disclosed. Tom Phillips said he will contine with Phillips Health "as both an investor and an advisor."

Current management to stay in place

Phillips Health's existing management will continue to run the new entity and no changes in operations are envisioned, including its offices in Potomac, Maryland. Keven Donoghue will remain CEO.

Kevin Penn, a managing director of ACI Capital, said, "Phillips Health typifies our portfolio strategy of investing in growth-oriented companies that have leading market positions, strong brand equity, experienced management, and a solid customer base. The company is well positioned to capitalize on the growth in the nutritional supplement industry."

David Horing, a managing director of ASCP, said, "Given our experience investing in other direct marketing companies, we have been impressed by the management team's disciplined approach to customer acquisition and its commitment to providing consumers with leading experts' viewpoints on alternative therapies. Since its formation, Phillips has managed to establish a remarkable bond with its customer base."

www.phillips.com/health

www.acicapital.com

www.American-Securities.com