GNC Holdings has canceled its planned auction and will move ahead with plans to sell itself to China-based Harbin Pharmaceutical Group, according to bankruptcy court filings. A hearing for the deal is scheduled for Sept. 17, but political figures have voiced concern about a potential sale.
The troubled retailer entered Chapter 11 bankruptcy in June with a “prepackaged” plan that included Harbin as the stalking horse bidder, and which valued GNC at $760 million. No other bidders came forth during the hearings.
The updated deal’s primary obstacle will be objections from politicians including Florida Sen. Marco Rubio, who cited concerns regarding the risk of personal data being exposed to the Chinese government through Harbin, according to Bloomberg. He has requested that the Committee on Foreign Investment in the U.S. (CFIUS) review the potential acquisition.
However, GNC stated that since 2018, Harbin’s controlling stake was already subject to review by the CFIUS for “any U.S. national security implications.” The retailer holds that “no facts or circumstances have changed to call the committee’s support into question” in the intervening time.
Even if the deal goes through, GNC has a lot of work ahead if it hopes to turn its fortunes around. The retailer’s bankruptcy plan calls for the closure of at least 800 to 1,200 stores, partially due to heavy exposure to the impact of the COVID-19 pandemic: 61% of its stores are in strip centers and 28% are in malls.