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Two months before they begin serving prison terms for tax evasion, Thomas and Dee Mower have completed the sale of Neways International to a San Francisco-based private equity firm that is heavily invested in Herbalife.
Golden Gate Capital did not disclose the financial details behind its acquisition of Springville-based Neways. But a Reuters report in September noted the retailer was being shopped in Japan for about $600 to 700 million.
That's in line with the $685 million Golden Gate, along with Whitney & Co., paid for Herbalife in 2002 before taking the company public.
The Mowers said in a statement that selling the cosmetics company they founded in 1992 was "one of the hardest decisions of our lives," but a buyout was best for them, employees and distributors.
Neways is a multi-level marketing company with about 1,500 workers worldwide, 550 in Utah and 500,000 independent distributors. Employees appreciate what the Mowers built for them but are "upbeat" about the buyout, said James Watson, Neways vice president for human resources and organizational management.
"So far it's been nothing but positive," Watson said of employee reaction. "Golden Gate knows our industry and will be a good resource in terms of developing and launching new products and opening new markets."
The Salt Lake Tribune reported Sept. 14 that Neways was planning to sell the company, citing disclosures in court filings. The documents cited "personal differences."
Golden Gate did not respond to requests for an interview. In a statement, Managing Director Prescott Ashe, called the acquisition "a perfect fit."
"The company's core mission - creating products with 100 percent nonharmful ingredients - is at the heart of consumers' desire to live longer, healthier lives and has driven more than a decade of consecutive, annual revenue growth," he said.
But that success has been tainted by scandal.
The Mowers, who divorced in July 2000, were convicted last year on six counts of tax evasion and one count of conspiracy to defraud for concealing more than $1 million in receipts received from Neways Australia and more than $3 million in commission income the couple received from U.S., Australian and Malaysian distributorships.
U.S. District Judge Dale Kimball rejected the Mowers' pleas for probation and in September sentenced Thomas Mower to 33 months in prison and a $75,000 fine. His ex-wife, Dee, was ordered to spend 27 months behind bars and pay a $60,000 fine. Their prison terms were to begin Monday, but on Nov. 1 the judge extended the deadline to Jan. 8.
Kimball also sentenced James Thompson, an Orem lawyer who served as counsel for Neways from 1995 to 1997, to 366 days in prison. Thompson, now disbarred, was found guilty of conspiracy and of corruptly impeding the due administration of tax laws.
Watson said the management team has managed to isolate employees from the Watsons' legal problems, saying "it hasn't had much of an impact" on morale.
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* Tribune reporter
PAMELA MANSON contributed to this story.
* Headquartered in Springville with plants in Salem and New Zealand.
* Makes and sells 300 products, including shampoos, shower gels, nutritional supplements and household cleaners.
* Employs 1,500 worldwide; 550 in Utah. Supplies about 500,000 distributors in 23 countries.
Golden Gate
Capital
* Based in San Francisco.
* Private Equity Firm with $3 billion in investments.
* Holdings include Herbalife, Spiegel and California Check Cashing Stores.