(Yicai Global) March 14 -- China's second-biggest drugmaker Harbin Pharmaceutical Group Co. will become the largest single shareholder in US nutritional supplements giant GNC Holdings Inc. through a USD300 million investment. The pair will also set up a joint venture to tap the Chinese nutritional market.
The firm, based in China's northern Heilongjiang province will take a 40 percent stake in GNC through the transaction, it said in a statement.
The JV will be registered in Hong Kong, with Harbin Pharmaceutical and GNC taking 65-percent and 35-percent stakes, respectively. It will have exclusive rights to GNC's operations in mainland China and long-term exclusive trademark licenses, to carry out GNC product manufacture and sales in China.
China's health supplement market has enjoyed strong momentum in recent years and is forecast to be worth CNY180 billion (USD26.5 billion) by 2020, up from CNY120 billion in 2015, according to a report from consulting firm Roland Berger.
The transaction amounts to USD299.95 million according to the securities purchase agreement signed, with Harbin taking 299,950 preferred shares with an annual dividend yield of 6.5 percent, though GNC has the right to pay preferred stock dividends in cash or by issuing preferred shares to the company, said the statement.
The investment in GNC and the establishment of a long-term strategic partnership with GNC will help enrich the Harbin Pharmaceuticals' product line, attract outstanding talents, and enhance the company's research and development, production and sales capabilities, the statement said.
GNC is an internationally renowned brand of nutritional supplements with more than 9,000 retail outlets in over 50 countries and regions and provides more than 1,500 health products.