Blackstone Group LP is teaming up with Bright Food Group Co., Shanghai’s biggest food and dairy company, to acquire vitamin and supplement retail chain GNC Holdings Inc., said two people with knowledge of the matter.
The deal may be announced as early as this month, said one of the people, who asked not to be identified because the talks are confidential. It may be the largest U.S. takeover by a Chinese buyer, eclipsing Lenovo Group Ltd.’s $1.25 billion purchase of International Business Machines Corp.’s personal computer business in 2004, according to data compiled by Bloomberg.
Bright Food is attempting its biggest acquisition as Chairman Wang Zong Nan expands overseas. Pittsburgh-based GNC, with more than 7,100 stores globally, may fetch about $2 billion, people familiar with the matter said in October. The Chinese company is close to an agreement to buy GNC for $2.5 billion to $3 billion, the Wall Street Journal reported earlier today, citing unidentified people.
There have been about 550 announced acquisitions this year involving food companies globally, which sold for a median multiple of 6.1 times earnings before interest, taxes, depreciation and amortization, according to Bloomberg data. GNC had ebitda of $227.7 million in 2009, according to a regulatory filing.
Bright Food tried and failed to buy CSR Ltd.’s Australian sugar unit in July. The company’s talks to purchase the U.K.’s United Biscuits from Blackstone and PAI Partners have stalled, the people said today.
Chen Chunshan, a Shanghai-based spokesman for Bright Food, didn’t respond to a text message seeking comment. Helen Winning, a spokeswoman for Blackstone in London, couldn’t immediately comment. Greg Miller, an external spokesman for GNC, didn’t immediately return a call seeking comment.
GNC hired Goldman Sachs Group Inc. and JPMorgan Chase & Co. to help search for a buyer, people familiar with the matter said in October. GNC and Bright Food agreed this year to form a joint venture to help the U.S. company enter the Chinese market. Bright Food unit Bright Dairy & Food bought a 51 percent stake in New Zealand dairy farm owner Synlait Milk Ltd. in July.
The largest acquisition of a food company this year was when a KKR & Co.-led group agreed to acquire Del Monte Foods Co. in a $4 billion transaction that valued the target at about 6.3 times ebitda last month.
Blackstone is among buyout firms planning to bid for Pfizer Inc.’s Capsugel business, three people with knowledge of the matter said in October. The New York-based fund bought Catalent Pharma Solutions Inc., maker of a vegetable-based soft gel shell system called VegiCaps, for $3.3 billion in 2007.
Ares Management LLC and the investment arm of the Ontario Teachers’ Pension Plan bought GNC in 2007 for $1.65 billion from private-equity fund Apollo Management LP. Apollo twice tried to take GNC public and withdrew its plans amid faltering sales and unfavorable market conditions.
GNC was founded in 1935 as General Nutrition Cos. It was a publicly traded company 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.
Net income rose to $51.1 million in the first six months of the year from $37.4 million in the same period a year earlier, according to a GNC filing with the Securities and Exchange Commission. Revenue increased 5.5 percent to $920.7 million.
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.