GNC cancels auction, plans sale of company to Chinese investor

Bankrupt GNC Holdings Inc. disclosed Monday it was cancelling a scheduled auction and designating its investor Harbin as the successful bidder.

Josh Long, Associate editorial director, Natural Products Insider

September 14, 2020

2 Min Read
GNC cancels auction, plans sale of company to Chinese investor

GNC Holdings Inc. on Monday cancelled a scheduled auction for its assets, advising a U.S. Bankruptcy Court that it did not receive any qualified bids other than from an affiliate of its largest shareholder.

The Pittsburgh-based supplements retailer plans to sell itself to China-based Harbin Pharmaceutical Group Holding Co. (Harbin), which previously invested $300 million in GNC.

In a court filing, GNC disclosed it was cancelling a scheduled auction and designating Harbin as the successful bidder. A hearing to consider approval of the sale to Harbin is scheduled for Sept. 17 at 10 a.m. before U.S. Bankruptcy Judge Karen Owens in Wilmington, Delaware.

Some Republicans in Congress from Florida—including Sen. Marco Rubio and Rep. Bill Posey—have raised national security concerns over the planned sale to Harbin, requesting a review of the transaction by the Committee on Foreign Investment in the United States (CFIUS).

GNC moved in June to restructure its business through a Chapter 11 bankruptcy petition and reached an agreement in principle to sell the business to Harbin for $760 million in cash and debt.

"Harbin is a long-time and trusted partner of GNC, and we are excited to move forward with them in this process as we seek the Court’s approval of the transaction," a GNC spokesperson said Monday. "We are pleased with the confidence our lenders and business partners have shown in the future of GNC throughout this process and are confident we will emerge a stronger business to the benefit of our associates, consumers, franchise partners and other stakeholders."

In a Sept. 4 court filing, lawyers representing a committee of GNC's unsecured creditors argued the nutrition company failed to satisfy its burden to show "the proposed sale is for an adequate price and was conducted in good faith, particularly when reviewed under the heightened level of scrutiny that applies to insider sale transactions." 

Jeffrey Cohen, one of the attorneys who signed the filing, said in an email Monday that the committee is engaged in talks "with the core parties in an effort to resolve our objections."

"Given the confidential nature of those discussions, it’s premature for me to share any details or discuss how we anticipate the court ruling on Thursday," he added.

In a regulatory filing, GNC said it expects "to emerge from the Chapter 11 proceedings early in the fourth quarter of 2020."

About the Author(s)

Josh Long

Associate editorial director, Natural Products Insider, Informa Markets Health and Nutrition

Josh Long directs the online news, feature and op-ed coverage at Natural Products Insider, which targets the health and wellness industry. He has been reporting on developments in the dietary supplement industry for over a decade, with a focus on regulatory issues, including at the Food and Drug Administration.

He has moderated and/or presented at industry trade shows, including SupplySide East, SupplySide West, Natural Products Expo West, NBJ Summit and the annual Dietary Supplement Regulatory Summit.

Connect with Josh on LinkedIn and ping him with story ideas at [email protected]

Education and previous experience

Josh majored in journalism and graduated from Arizona State University the same year "Jake the Snake" Plummer led the Sun Devils to the Rose Bowl against the Ohio State Buckeyes. He also holds a J.D. from the University of Wyoming College of Law, was admitted in 2008 to practice law in the state of Colorado and spent a year clerking for a state district court judge.

Over more than a quarter century, he’s written on various topics for newspapers and business-to-business publications – from the Yavapai in Arizona and a controversial plan for a nuclear-waste incinerator in Idaho to nuanced issues, including FDA enforcement of the Dietary Supplement Health and Education Act of 1994 (DSHEA).

Since the late 1990s, his articles have been published in a variety of media, including but not limited to, the Cape Cod Times (in Massachusetts), Sedona Red Rock News (in Arizona), Denver Post (in Colorado), Casper Star-Tribune (in Wyoming), now-defunct Jackson Hole Guide (in Wyoming), Colorado Lawyer (published by the Colorado Bar Association) and Nutrition Business Journal.

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