Jack Perkowski Quoted in the Financial Times

Jack Perkowski Quoted in the Financial Times

Bright Food eyes GNC HoldingsJP headshot book

Louise Lucas in London and Helen Thomas in New York, 20:04, Tuesday 7 December 2010

China’s Bright Food Group is in talks to buy US vitamin retail chain GNC Holdings for more than $2.5bn, according to people familiar with the matter, with private equity group Blackstone (NYSE: BXnews) likely to invest alongside the Chinese company.

The Shanghai-based group, which had also been in exclusive talks to buy United Biscuits of the UK, switched its focus to GNC over the summer when the sellers – Ares Management and Ontario Teachers’ Pension Plan – hired bankers to sell or float the company.

People familiar with the matter suggested that a deal could be announced within days but warned that the details of an agreement had yet to be finalised and the transaction could yet collapse or be delayed.

The involvement of Blackstone, which along with France’s PAI is selling United Biscuits, was “curious”, said bankers not involved in the deals, given its role as seller of the biscuit maker. Although other trade buyers are in the wings, their appetite for United Biscuits is seen as relatively weak: Kraft, for example, is still digesting the Cadbury acquisition.

Blackstone declined to comment. But some observers argued that the group could be structuring the deals as a staggered exit or be seeking some sort of quid pro quo from Bright Food in return for helping it secure GNC.

GNC could fetch between $2.5bn and $3bn, said people familiar with the talks. Carlyle, the US private equity group, earlier this year paid about eight times earnings before interest, tax, depreciation and amortisation for rival vitamin franchise, NBTY (Xetra: NBT.DEnews) . GNC’s owners paid $1.65bn for the business in 2007, from Apollo Management. The company provides limited public financial information but had $227.7m of ebitda in 2009, according to Bloomberg.

Bankers said the deal was a better fit than United Biscuits for Bright Food, which already runs a joint venture with GNC in China, and better plays to local culture – with vitamins and health supplements proving popular in the country.

The retail sector has opened up in China; the sector is now developing rapidly … and there is a strong interest in everything that’s health-related,” said Jack Perkowski, a Beijing-based investment banker.

“Bright Food also gets access to the supply chain for these products. The Chinese [consumers] know there is a quality difference in health products that they might buy in China versus those from outside China.”

JPMorgan and Goldman Sachs (NYSE: GSnews) are advising GNC on the potential sale. The banks declined to comment.

Contact us at Speakers Connect at [email protected] or +852 21654126 if you would like to engage Jack Perkowski for your next event, or viist us for more China experts  from us.

Log in to post a comment.