Chinese Buyout Firms Said to Vie for Canada's Iovate Health

  • CDH, Hony Capital chosen to make second-round offers
  • Kelso, Xiwang Group also among suitors proceeding in bidding

Chinese buyout firms CDH Investments Fund Management Co. and Hony Capital Ltd. are among suitors invited to make second-round bids for Iovate Health Sciences International Inc., a Canadian maker of nutrition and weight-loss products, people with knowledge of the matter said.

U.S. buyout firm Kelso & Co. and Xiwang Group Co., a Chinese conglomerate with businesses spanning sugar to steel, are also among bidders picked to submit second-round offers, the people said, asking not to be identified as the information is private.

Iovate, the closely-held maker of “MuscleTech” and “Six Star Pro Nutrition” supplements, is seeking a buyer in a deal that could value the company at as much as $1 billion, people with knowledge of the matter said last month. No final decision has been made, and the bids may not result in a deal, they said.

Rising incomes and a desire for healthier lifestyles are driving Chinese consumers’ demand for dietary supplements and more wholesome foods. In China, which has more than 100 million diabetics, the proportion of overweight and obese adults jumped to 35.4 percent in 2014, according to the World Health Organization.

Overseas Dealmaking

A purchase of Iovate would follow Chinese infant formula producer Biostime International Holdings Ltd.’s agreement in September to buy control of Australian multivitamin maker Swisse Wellness Group Pty for A$1.3 billion ($956 million). Any deal would add to the $10.6 billion in acquisitions of Canadian consumer companies announced this year, up from $2.6 billion for the same period in 2015, data compiled by Bloomberg show.

Iovate has more than 250 employees and owns six national brands that are distributed globally, according to its website. The Ontario-based company also has more than 40 pending patent applications, the website shows.

Officials at CDH, Hony and Kelso declined to comment. A person who answered the phone at the Xiwang Group head office in eastern China’s Shandong province said company officials weren’t immediately available to comment. A representative for Iovate didn’t respond to requests for comment.

Chinese buyout firms have become more active in seeking overseas deals since 2014, when Hony bought U.K. restaurant chain PizzaExpress Ltd. for $1.5 billion, according to data compiled by Bloomberg. A group of investors led by Legend Holdings Corp. and Hony acquired a $430 million stake in WeWork Cos. earlier this year, while a consortium including Golden Brick Capital Management Ltd. agreed in February to purchase Norwegian web-browser developer Opera Software ASA for $1.2 billion, the data show.

Xiwang Group is the biggest investor in Xiwang Foodstuffs Co., a $1.1 billion maker of cooking oil, with a 34.9 percent stake, according to data compiled by Bloomberg. Shares of Xiwang Foodstuffs have fallen 9.7 percent in Shenzhen trading this year.

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