GNC to favor IPO as Chinese interest cools?

By Stephen Daniells

- Last updated on GMT

Pittsburgh-based supplement retailer GNC is reported to favor an initial public offering (IPO) after reports claim that interest cooled from Chinese dairy giant Bright Food Group Co to acquire the company.

A figure in the region of $2.5 billion would have been sufficient for Bright Food to acquire GNC Holdings Inc., according to Reuters​. The news agency, quoting a “source familiar with the negotiations”​, states that, while negotiations with the Chinese dairy giant may reopen, an IPO is now the “most likely route”​ for GNC.

The nutritional products retailer filed papers for an IPO to raise up to $350 million in September with the US Securities and Exchange Commission (SEC).

Recent reports differ on whether talks have ended or are on-going, but a report published January 25 on TradingMarkets.com said that the Chinese dairy giant had withdrawn from negotiations because “the two parties have not reached a census in price and other terms”​, according to “people close to the matter”​.

Such claims differed from official statements from the dairy giant, which reportedly cited the initial public offering (IPO) plan as the “fundamental reason” ​for the breakdown in negotiations.

GNC refused to comment on “rumors or market speculation”​ because it is in a “quiet period for an IPO registration”​.

Financial performace

The company posted an EBITDA of $136.5 million for the first six months of 2010, according to its filing with the SEC, compared with $118.9 million for the same period in 2009.

The Retail segment of the company continues to grow, and GNC posted an increase of $69.3 million, or 7.2 percent, to $1,031.9 million for the first three quarters of 2010. This compared with $962.6 million for the same period in 2009.

Its manufacturing side is not experiencing the same growth, however, and posted a decrease of $7.3 million, or 5.2 percent, to $132.2 million for the nine months of 2010, compared with $139.5 million in 2009.

Since 1935

GNC is headquartered in Pittsburgh, and was founded in 1935. The company sells a range of dietary supplements, sports drinks and health food via 7,100 stores in 48 international markets.

Related topics: Business, East Asia, Supplements, China

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