Dec. 7 (Bloomberg) -- China’s Bright Food Group Co. is close to an agreement to buy GNC Holdings Inc. for as much as $3 billion, the Wall Street Journal reported, citing unidentified people familiar with the situation.
The purchase for between $2.5 billion and $3 billion would give the Shanghai-based company control of 7,100 retail outlets selling vitamins, nutrition supplements and sports drinks, the Journal said Dec. 6. Chen Chunshan, a spokesman in Shanghai for Bright Food, declined to comment. Laura Brophy, an external spokeswoman for GNC, said by e-mail today that the company doesn’t comment on rumors or market speculation.
Bright Food, Shanghai’s biggest food and dairy company, is targeting overseas acquisitions to bolster growth. The company entered talks in September to buy the U.K.’s United Biscuits Holdings Ltd. and in April offered A$1.75 billion ($1.7 billion) in an unsuccessful bid for the sugar unit of Australia CSR Ltd.
GNC is seeking bidders for a possible sale of the company that may fetch about $2 billion, and hired Goldman Sachs Group Inc. and JPMorgan Chase & Co. to help find a buyer and prepare for a possible initial public offering, three people familiar with the matter said in October. Bright Food is among companies that expressed interest and signed a confidentiality agreement, the people said at the time, declining to be identified because the talks are private.
Bright Food was established in August 2006 by the Shanghai municipal government and Shanghai DaSheng Holdings Co., according to information on its website. It controls four publicly traded companies, including Bright Dairy & Food Ltd. and Shanghai First Provisions Store Co.
GNC agreed in February to partner Bright Food in the nutritional products market in China, citing significant growth opportunities.
GNC has more than 4,800 retail locations in the U.S. and franchise operations in 48 markets overseas, according to its website.
It was founded in 1935 as General Nutrition Companies. The company was publicly traded until 1999 and has since had owners including private-equity funds and Royal Numico NV. The chain’s largest market outside the U.S. is Mexico, where it has 352 stores. Ares Management LLC and Ontario Teachers’ Pension Plan Board bought GNC in 2007 for $1.65 billion from private-equity fund Apollo Management LP.
Net income at GNC rose to $51.1 million in the first six months of the year from $37.4 million a year earlier, according to a filing to the Securities and Exchange Commission. Revenue increased 5.5 percent to $920.7 million. GNC posted earnings before interest, taxes, depreciation and amortization of $227.7 million on revenue of $1.71 billion for full-year 2009.
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