GNC may go to Chinese Ownership

If you are a GNC customer you may wish to consider this knowing what we know about the Chinese supplements sourcing issues and toxic ingredients.

A December 7 brief from Bloomberg says that Chinese food and dairy conglomerate BrightFood is looking to acquire supplement retailer GNC in a deal that could be cemented by the end of this year. Estimated at $2.5 billion to $3 billion, the potential acquisition, should it come to fruition, would represent the largest takeover of a U.S. business from a Chinese buyer ever, said Bloomberg.

Earlier this year, GNC inked a deal with Bright Food to start a joint venture, GNCChina, to sell supplement products to Chinese consumers. China ranks third—behind the United States and Japan—in consumer sales of supplements, according to NBJ research, with potential to become the largest in coming years. According to NBJ's 2010 Global Supplement & Nutrition Industry Report, Chinese supplement sales grew 9.3% in 2008, reaching $8.1 billion.

from Nutrition Business Journal that continues with their query...

Setting xenophobia aside, this story still leaves a sour taste. One is reminded of Dutch baby food firm Royal Numico and its purchase of GNC in 1999 for $2.5 billion. Failing to adequately mesh the retailer into its core business, Royal Numico ended up selling GNC to private equity firm ApolloManagement four years later for a dismal $750 million. GNC's owners might be better off focusing on updating the company's retail strategy rather than playing this global game of hot potato, especially when it seems to come down to choosing between the lesser of two evils. Which is better for the U.S. nutrition industry: American private equity or Chinese conglomerates?

Posted in: China,GNC,Nutrition Business Journall