Harbin Pharmaceutical Group Holding Co. Ltd (HPGC) may be inching closer to approval to acquire GNC Holdings Inc., but the Chinese company faces two potential hurdles in its quest to take full control of the 85-year-old nutrition company—including national security concerns raised by some members of Congress.
In June, a struggling GNC moved to restructure its business through a Chapter 11 bankruptcy petition and reached an agreement in principle to sell the business to HPGC for $760 million in cash and debt.
The Chapter 11 case is pending before Judge Karen Owens in the U.S. Bankruptcy Court for the District of Delaware. If multiple bidders emerge for GNC, an auction is scheduled for Sept. 15, followed two days later by a hearing in which Owens would hear any objections and ultimately approve a sale to the successful bidder.
Even if GNC doesn’t receive more attractive offers for its business by the bidding deadline, HPGC—an affiliate of GNC’s largest shareholder—faces another potential roadblock: In a Sept. 10 letter to Treasury Secretary Steven Mnuchin, Sen. Marco Rubio raised national security concerns over the Chinese company’s potential acquisition of GNC. He requested a full review of the possible deal by the Committee on Foreign Investment in the United States (CFIUS), whose members include the heads of the Treasury, Justice and Homeland Security departments, among other agencies.