US court clears sale of Vitamin World to Feihe International

A US bankruptcy court judge approved New York-based Vitamin World Inc's sale to Feihe International on Thursday, a move which will help the Chinese baby formula maker to expand into the nutrition and health business amid a saturating milk powder market in the country.

Vitamin World Inc, the third largest nutritional supplements retailer in the US, said on Thursday that it will be acquired by China's leading infant and toddler formula milk powder company Feihe International for $28 million. Vitamin World filed for Chapter 11 bankruptcy in September.

According to Feihe International, the two firms will join hands to better tap the health market.

"While continuing to focus on infant and baby formula milk powder, Feihe is ready to explore the health and nutrition market in China, which has great potential and it has answers to the dynamic demands of affluent Chinese consumers," Leng Youbin, chairman of Feihe International, told China Daily.

According to Euromonitor International, the total market size of the vitamins and dietary supplements in China was about 122.4 billion yuan ($18.5 billion) in 2016.

Vitamin World's diversified product portfolio－more than 600 products including vitamin and herbal products, as well as its leading industrial management, will bring valuable assets to Feihe as it continues to expand in the domestic health market, said Leng.

Feihe plans to introduce imported high-end health and nutrition products to the Chinese market soon and will have an independent team to operate its health sector, it said.

Michael Madden, CEO of Vitamin World, said the cooperation will help Feihe to provide high-end nutrition products for consumers of all ages.

Vitamin World has 156 retail stores in major cities in the US, including New York, Los Angeles and Florida.

The company also sells products through its e-commerce platform.

Feihe said they will retain the remaining stores in the US, which will serve as a good platform for its US expansion.

Feihe is the largest domestic-brand baby formula supplier in China, and had registered for an initial public offering on the Hong Kong Stock Exchange this year.

Song Liang, an independent analyst, said the move reflects the fierce competition within the domestic baby formula milk powder industry, which is expected to grow to 100 billion yuan by 2020.

"If one company grows, another company will wane," said Song. "The increasingly transparent prices and market information will lead to lower gross profits."

The deal will help Feihe to connect with the international market and boost Vitamin World's presence in China and other Asia-Pacific markets, said Song, adding that the existing US retail stores will boost local employment and economy.