$1.5 billion: vitamin C giant IVC Nutrition Corporation up for sale

According to Reuters, Aland Health Holding (referred to as "Aland"), a Chinese nutritional supplement manufacturer, is seeking to sell a controlling stake, with a valuation exceeding $1.5 billion (approximately RMB 10.8 billion).

This is a company from Jiangsu, which started as a pharmaceutical factory in Jingjiang in 1998. With the debut of its first VC effervescent tablet, it has ranked among the top domestic health product exporters for consecutive years. IVC Nutrition Corporation has witnessed the arduous development journey of China's health product industry.

It is reported that this sales plan has attracted the attention of several private equity investment companies. Such a scene is not unfamiliar to us, as consumer M&A remains hot.

From Jiangsu, the Vitamin C lozenge giant is up for sale

The story of IVC Nutrition Corporation begins with its founder, Chang Liang, and Jiangshan Pharmaceutical.

Jiangshan Pharmaceutical was founded in 1990, initially as a glucose factory in Jingjiang, Jiangsu. In 1997, it entered the vitamin C tablet field to seek new development opportunities. The following year, Jiangshan Pharmaceutical successfully obtained the first health food approval for vitamin C lozenges in China and quickly registered the "Elden" trademark, officially entering the nutritional health products industry.

At that time, the health products industry was a mixed bag. As a bulk raw material drug, the vitamin C industry had strong cyclicality and fierce price competition, leading to unstable development.

In 2006, Chang Liang began serving as the chairman of Jiangshan Pharmaceutical. As the person in charge, he realized that relying on a single vitamin C active pharmaceutical ingredient (API) product to compete on price in the low-end market was unsustainable. He decided to shut down part of the API production capacity, expand the contract manufacturing business for health products, develop nutritional supplements, and furthermore, enter the international market.

In 2010, Jiangshan Pharmaceutical spun off its nutrition business into Jiangsu IVC Nutrition Corporation. In 2015, the equity of Jiangshan Pharmaceutical was sold to DSM Group, but Chang Liang did not include IVC Nutrition in the sale package. Subsequently, he began to focus on the operations of IVC Nutrition.

So far, IVC Nutrition Corporation's products cover traditional tablets, powders, hard capsules, and soft capsules, as well as gummy candies, functional beverages, and protein powders. It has 11 production bases and 4 international R&D centers worldwide, with products sold in more than 80 countries.

The ambition goes beyond the domestic market. Since 2010, IVC Nutrition Corporation has embarked on a series of cross-border acquisitions—including the U.S.-based nutritional products company IVC, the UK biotechnology firm Brunel, Canada's Vita Health Products, and Nutra Manufacturing, a supply chain factory under GNC—all of which have been brought under its umbrella.

"Each acquisition grants us a new technology platform and market channel," Chang Liang once commented. This global integration strategy has enabled IVC Nutrition Corporation to establish a worldwide network layout encompassing raw material procurement, R&D, production, and sales, achieving the internationalization of China's nutritional health industry.

In the process of expanding overseas again and again, the figure of a female general in mergers and acquisitions emerged - Ma Bing. As the Executive Vice President of IVC Nutrition Corporation, Ma Bing is responsible for the company's financial management and investment and financing work. Since joining the company in 2015, she has successively led and completed six cross-border mergers and acquisitions. Not only that, in June 2017, as the strategic operation of IVC gradually got on track, Ma Bing led her team to successfully pass the due diligence of Goldman Sachs, facilitating Goldman Sachs' investment in IVC.

Nowadays, the news that IVC Nutrition Corporation is seeking to sell its controlling stake has triggered widespread speculation in the industry. The intensifying market competition has become unavoidable, and many giants are selectively exiting this field. This might be Chang Liang's strategy to introduce strategic investors and achieve a new round of development for the company, but the possibility of the founder stepping back after achieving success cannot be ruled out.

This Year's Trend: Selling Yourself

Currently, the consumer brands we are familiar with are all lining up to sell themselves.

For instance, Häagen-Dazs. The Financial Times reported that Goldman Sachs is preparing to acquire ice cream producer Froneri at a valuation of 15 billion euros (approximately 120 billion RMB), with the deal expected to be signed as early as September this year. Froneri was jointly founded by Nestlé and PAI Partners, with Nestlé injecting its U.S. ice cream assets into the venture, thereby transferring the operational rights of Häagen-Dazs in regions such as the U.S. and Europe entirely to Froneri.

Not long ago, the investment community confirmed with a well-known private equity firm: General Mills is also planning to sell Häagen-Dazs China. Later, news emerged that the sale includes all Häagen-Dazs store operations in mainland China, with the buyer needing to obtain authorization from General Mills, potentially with a time limit. The potential transaction value is approximately $500 million to $800 million, with multiple renowned institutions participating in the bidding.

The most sensational move was PE's acquisition of Starbucks. After 26 years in China with over 7,700 stores, Starbucks China, facing fierce competition from local brands like Luckin Coffee and Mixue Ice City, has decided to sell its equity in the Chinese business.

This scene has so far attracted interest from renowned institutions such as Hillhouse, Carlyle Investment, Trustar Capital, and Primavera Capital. Even Luckin Coffee's major shareholder, Centurium Capital, has participated in the bidding, with Tencent and JD.com also showing up in the mix.

Also opting to sell is Decathlon. Not long ago, Bloomberg reported that the French sports brand Decathlon has initiated the sale of its Chinese business, planning to sell a 30% stake, with an estimated valuation of 1 billion to 1.5 billion euros (approximately 8 to 12 billion yuan). It is reported that several institutions have already started reaching out, but negotiations are still in the early stages.

In recent years, Decathlon has faced challenges such as declining net profits and obstacles in its high-end transformation. Although the Chinese market remains one of its top five global revenue sources, it has already encountered significant competition domestically from local brands like Anta and Li-Ning.

These choices of consumer brands have become a microcosm of changes in the global macroeconomy. Upon closer inspection, whether it is IVC Nutrition Corporation, Starbucks, Decathlon, or Häagen-Dazs, they have all chosen to sell assets at this time. Without exception, they are facing intensified market competition in China and globally, and are at a cyclical low point. To some extent, these strategic adjustments are also responses to crises.

On the other hand, the bottom-fishing opportunity has emerged for buyers.

A common view is that the consumer industry has always been considered a sector with rigid and anti-cyclical attributes, thus making it more favored by capital during periods of economic fluctuation. In this context, acquiring the Chinese operations of a multinational company has become a primary focus for consumer mergers and acquisitions.

We are witnessing the arrival of one big deal after another.