June 1 (Reuters) - Chinese food and industrial conglomerate Xiwang Group Company Ltd is in advanced talks to buy Iovate Health Sciences International Inc, the Canadian owner of nutrition supplement MuscleTech, according to people familiar with the matter.
Iovate is the latest Canadian vitamin maker to attract Chinese interest, as growing awareness of health and wellness issues among Chinese consumers, combined with a lack of confidence in China's safety standards, spurs the country's companies to look overseas for nutritional supplement assets.
Canada has some of the most stringent safety standards for nutrition supplements in the world, making its companies coveted among peers for the popularity of their brands. Canadian vitamin maker Jamieson Laboratories, owned by private equity firm CCMP Capital Advisors LP, has also attracted interest from Chinese buyers, Reuters previously reported.
Xiwang, which is controlled by Chinese Communist Party insider Wang Yong, has so far prevailed in an auction for Iovate and is negotiating a price of more than $700 million, the people said this week.
Privately held Iovate has around $70 million in 12-month earnings before interest, tax, and depreciation, the people added, asking not to be identified because the negotiations are confidential.
There is no certainty that Xiwang will reach an agreement with Iovate, or that any deal would clear all regulatory hurdles, the people cautioned.
Xiwang and Iovate did not immediately respond to requests for comment.
Xiwang's bid follows a string of Chinese acquisition efforts overseas, after the government encouraged outbound corporate investment in light of slowing domestic growth. Last year, Chinese companies scored a record $104 billion of foreign deals, nearly double that of 2014, according to Thomson Reuters data.
Headquartered in Oakville, Ontario, Iovate's nutrition supplement brands include MuscleTech, Six Star Pro Nutrition, Purely Inspired and Hydroxycut. It has partnerships with major North American retailers, such as Wal-Mart Stores Inc, Walgreens Boots Alliance Inc and Sam's Club.
Iovate was founded in 1995 as a direct-to-consumer mail order business. In 2010, the U.S. Federal Trade Commission charged Iovate with deceptive health claims about its products. Iovate subsequently settled that charge.
Founded in 1986, Xiwang is active in beverage, food, steel logistics and several other industries, according to its website. Its chairman Yong is Communist Party secretary in the village of Xiwang in China's eastern Shandong province, where Xiwang is based.
Xiwang Foodstuff Co Ltd, in which Xiwang has a nearly 35 percent stake, specializes in processing and distributing corn oil and products, and has a nearly $1 billion market capitalization.
It could not be immediately determined whether the acquisition of Iovate would come through Xiwang Foodstuff, Xiwang Group, or another affiliated entity.
Reporting by Lauren Hirsch in New York and Denny Thomas in Hong Kong; Additional reporting by Carol Zhong in Hong Kong and Greg Roumeliotis and Gui Qing Koh in New York; Editing by Tom Brown