Chinese Companies Buy Australian Vitamin Maker For US$239 Million

Friday, August 5th, 2016 | 672 Views

Chinese drugmaker Shanghai Pharmaceuticals and private equity firm Primavera Capital have agreed to buy Australian vitamin maker Vitaco for A$313.7 million (US$239 million).

Vitaco said in a statement that the Chinese firms would buy all of the company at a valuation of A$2.25 per share, a 28 percent premium to their closing price on Wednesday, 3 August 2016.

The Australian vitamin firm said the deal would help it grow in China, the world’s second-largest economy, where vitamins and dietary supplements business is expected to surge to around US$20 billion by 2018, according to Euromonitor.

Vitaco owns brands such as Nutra-Life, Wagner, and Abundant Earth. It has seen stocks plunge over 40 percent from a high of A$3.23 last November, after a month it was listed at A$2.10 apiece, reported Deal Street Asia.

Vitaco’s chairman Greg Richards said the deal was attractive for shareholders due to “ongoing volatile macroeconomic conditions and regulatory uncertainty in China”.

China is a major destination for Australian products, however Beijing’s move last April to raise tariffs and tighten controls on certain imports have dampened the business outlook for certain industries.

Shanghai Pharmaceuticals said it would take a 60 percent stake of Vitaco for 938 million yuan (US$141 million), as part of a deal with Primavera.