Procter & Gamble (NYSE: PG) announced a definitive agreement to acquire Thorne, a premium health and wellness supplement company, in an all-cash transaction valued at $3.8 billion. The deal, disclosed Wednesday, represents a significant strategic move to strengthen P&G's high-margin health care portfolio, which has faced organic volume declines.
Under the terms, P&G will pay $3.8 billion for Thorne, implying a valuation of 5.85 times Thorne's projected 2026 sales of $650 million. The acquisition price is a substantial premium to the $680 million that private equity firm L Catterton paid for Thorne in 2023, reflecting a 5.6-fold increase in valuation. While Thorne's rapid revenue growth—a 30.9% compound annual growth rate between 2023 and 2026—justifies part of the premium, the multiple expansion also plays a key role.
Thorne is a relatively small piece of P&G's overall business, representing just 0.75% of the company's fiscal 2026 revenue, which totaled $87.0 billion. However, within P&G's Health Care division, which generated $12.46 billion in sales last fiscal year, Thorne accounts for 5.2% of projected revenue. This makes the acquisition more impactful for the division, which has struggled with a 2% decline in organic volume in fiscal 2026 and a 1% drop in the fourth quarter.
P&G CEO Shailesh Jejurikar defended the price tag, calling it “a good price for the growth rates they have” and noting that the multiple aligns with recent industry averages. The company expects the transaction to close in 2026, subject to regulatory approvals and customary closing conditions.
The market reaction was mixed. P&G shares fell 1.5% to $145.72 by 9:50 a.m. EDT on Wednesday, erasing roughly three-quarters of the 2.1% gain posted on Tuesday when the deal was first reported. The broader Consumer Staples Select Sector SPDR Fund (XLP) was down 0.6% in early trading.
The acquisition comes as P&G faces a challenging operating environment. In fiscal 2026, organic sales growth of 1% was driven entirely by price increases, with volumes flat. Core earnings per share for the fourth quarter declined 3% to $1.43. The company has also announced plans to cut up to 7,000 non-manufacturing jobs as part of a restructuring program, with most of the $1.0–$1.6 billion pre-tax charges expected to be recognized in fiscal 2026.
Thorne's strong growth trajectory—sales are projected to reach $650 million this year, up from $290 million in 2023—is a key reason P&G is willing to pay a premium. Sustaining this growth would add roughly $201 million annually to P&G's top line, equivalent to 23 basis points of sales growth. The deal also aligns with P&G's focus on premium wellness products, as highlighted by Health Care head Paul Gama.
The supplements market is consolidating, with peers like Haleon (HLN) and Unilever (UL) also making strategic moves. Haleon has been linked to Thorne, while Unilever acquired Grüns supplements in April. Meanwhile, Nestlé (NSRGY) is reviewing its vitamin business, which faces slower growth and slimmer margins. This environment underscores the strategic rationale for P&G's acquisition, but also highlights the risks of integrating a high-growth brand into a large consumer goods conglomerate.
Analysts have maintained a generally positive outlook on P&G, with a consensus rating of Outperform and an average price target of $160.70, representing about 10% upside from Wednesday's price. Deutsche Bank, Citigroup, and Jefferies all have Buy ratings with targets ranging from $162 to $177. However, these targets were set before the Thorne announcement and do not account for the deal's potential impact.
Risks to the acquisition include Thorne's growth momentum slowing after integration, potential damage to its practitioner-focused brand if distribution is broadened too aggressively, and regulatory hurdles. The 5.85x sales multiple also leaves little room for error if growth falters. Still, P&G's management appears confident that Thorne's premium positioning and strong growth will help rejuvenate its health care division and drive long-term shareholder value.
