International Vitamin Corporation will pay US$176 million for supplements production facilities in the US
Retail giant GNC Holdings (GNC) has agreed to integrate its manufacturing division with International Vitamin Corporation (IVC), a consortium of Chinese investors. The agreement will see IVC's subsidiary in Irvine, California (US), owning GNC's Nutra manufacturing business by 2023.
Under the terms of the agreement, GNC will receive approximately US$176 million ($101m received in 2019) from IVC and in exchange for the net assets of Nutra manufacturing facilities in Greenville and Anderson. GNC will initially retain a 43% interest in the new joint venture with IVC.
Over the next four years, GNC will receive an additional $ 75m, adjusted up or down based on the joint venture's future performance, from IVC as IVC’s ownership of the joint venture increases to 100%. The joint venture will be responsible for the manufacturing of the products produced today by Nutra.
Ken Martindale, Chairman and CEO of GNC, commented: “This partnership with IVC will provide us with a level of efficiency we could not have achieved on our own while allowing our team to continue focusing on delivering high quality, innovative products to our customers."
He continued: "IVC has the capacity to scale up, giving us room for future growth and supporting our global expansion plans without the need for significant future capital investment.”
According to the company website, Nutra Manufacturing began operation in 1978 in a 65,000 square foot facility. The supplements manufacturing business of GNC now operates two facilities, one in Greenville, SC with 320,000 square feet and one in Anderson, SC totalling 630,000 square feet of production and warehousing.
IVC has said its manufacturing facilities utilise vertical supply chain integration and state-of-the-art manufacturing technologies for both high volume and flexible needs resulting in efficient production costs.
The company has developed, end-to-end manufacturing capabilities and more than a million square feet of manufacturing, packaging, warehousing and distribution facilities in the US.
IVC operates facilities in Europe and China, and is targeting further growth internationally in Europe, Australia and Canada.
"This venture demonstrates the value of IVC's highly differentiated manufacturing platform. GNC, one of the most trusted and innovative supplement brands in the world will now have the ability to devote even greater resources to new product development and brand expansion, while IVC's manufacturing expertise will deliver high quality at competitive costs," said Steven Dai, President and CEO of IVC.
This is a second joint venture that GNC has announced this year. Speaking at the earnings call for Q4 2018, Martindale said that GNC has received $150m of a $300m investment from Harbin Pharmaceutical. Both companies have plans to form two joint ventures, one focused on Hong Kong and the other in mainland China.