Status: Upcoming/New Filing

 

Acquirer:  Harbin Pharmaceutical Group Holdings Co., Ltd. (China)

Acquired:  GNC Holdings, Inc. (US)

Value:  Approx. US$300 million

Industry:  Retail; Pharmaceutical


On February 13, Harbin Pharmaceutical Group Holdings Co., Ltd., a pharmaceutical corporation incorporated in the People’s Republic of China, and GNC Holdings, Inc., a Delaware corporation and “specialty health, wellness and performance retailer,” announced a “strategic investment and China joint venture,” whereby Harbin will become GNC Holdings’ “single largest shareholder.” (GNC Holdings Press Release, GNC and Harbin Pharmaceutical Announce $300 Million Strategic Investment and China Joint Venture, GNC Holdings, Inc., Form 8-K, Ex-99.1, Feb. 13, 2018, SEC Filing.) In conjunction with the investment, the parties’ plan to form a joint venture for “the manufacturing, marketing, sale and distribution of GNC-branded products in China . . .” (Id.) “The joint venture would be controlled 65% by the [Harbin] and 35% by [GNC Holdings].” (GNC Holdings, Inc., Form 8-K, Ex-99.1, Feb. 13, 2018, SEC Filing.) The amount of voting interest to be held by Harbin was disclosed, but GNC Holdings stated that, in connection with the Securities Purchase Agreement, they expect to enter into a stockholders agreement where, as long as Harbin holds at least 15% of the outstanding Common Stock, it “will have the right to designate up to five directors” with certain other limitations and rights. (See GNC Holdings, Inc., Form 8-K, Ex-99.1, Feb. 13, 2018, SEC Filing.)

Under the executed Securities Purchase Agreement, Harbin will acquire 299,950 shares of the GNC Holdings’ Convertible Preferred Stock for an aggregate amount of US$299,950,000. (Securities Purchase Agreement, GNC Holdings, Inc., Form 8-K, Ex-10.1, Feb. 13, 2018, SEC Filing.) The agreement requires that the parties obtain CFIUS Clearance as a condition to closing. (Id. at §6.1(c)(iii).) The agreement also requires Harbin, within 10 days, to provide an “accurate schedule” of “all individuals and entities that . . . hold, own, or control equity or voting interests in Investor of five percent or greater (whether directly or indirectly);” and to list and provide information on “all individuals and entities that are affiliated with any foreign government or may be ‘foreign government controlled’ under Section 721 of the DPA, regardless of the magnitude of their ownership interests in Investor . . .” (Id. at §5.7(a)-(c).) According to GNC Holdings’ press relase, “CITIC Capital Holdings Limited (“CITIC Capital”), as a major shareholder of [Harbin], is supportive of the transaction.” (GNC Holdings Press Release, GNC and Harbin Pharmaceutical Announce $300 Million Strategic Investment and China Joint Venture, GNC Holdings, Inc., Form 8-K, Ex-99.1, Feb. 13, 2018, SEC Filing.) CITIC Capital is listed as a “related company” of CITIC Group Corporation, “a large state-owned multinational conglomerate.” (CITIC Group website, Our Businesses page and Chairman’s Message.)