(Yicai Global) June 29 -- Shares of Harbin Pharmaceutical Group plunged by the exchange-imposed daily limit after the drugmaker offered USD760 million for the assets of bankrupt US vitamin and supplements retailer GNC Holdings, in which it has a 40 percent stake.

Harbin Pharma’s stock price [SHA:600664] ended 7.8 percent lower at CNY3.07 (43 US cents), after earlier dropping by as much as 10 percent on the first day of trading after the three-day Dragon Boat Festival holiday.

Pittsburgh-based GNC filed for Chapter 11 bankruptcy, which would allow the firm to try to get back on its feet through the restructuring of assets, on June 23. The health supplement seller has been hard hit by the Covid-19 pandemic. It was forced to temporarily shutter 1,300 stores in the US and Canada, around 40 percent of its outlets, some of which may never reopen.

During the bankruptcy process, GNC is expected to permanently close between 800 and 1,200 shops, around 20 percent of its brick-and-mortar retail outlets, and to boost the proportion of its e-commerce business, Harbin Pharma said on June 26. The debt restructuring only involves GNC North America.

But their GNC China joint venture, in which Harbin Pharma owns 65 percent, has done well despite the impact of the epidemic. Profit more than doubled in the first half from the same period last year and sales were up by more than 50 percent, according to Harbin Pharma.

Harbin Pharma paid USD300 million in 2018 for 6.5 percent-yielding shares in GNC, which would give it a 40 percent stake if converted. But GNC defaulted on a dividend due at the end of March and is unlikely to be able to meet future payments. The drugmaker has now lost half of its initial investment in GNC, worth CNY1.2 billion (USD169.6 million) due to changes in fair value, it said on June 22.

GNC's [NYSE:GNC] share closed down 7 percent last week at USD0.62.

Editor: Kim Taylor