A New York vitamin company has made a $230 million bid to buy troubled generic drug and vitamin maker Leiner Health Products, according to documents filed this week with the U.S. Securities Exchange Commission.
NBTY, the parent company of nutritional brands Met-Rx, Nature's Bounty, Vitamin World and others, has offered to buy Leiner's assets and assume certain liabilities, the documents state.
Leiner operated a vitamin and over-the-counter drug plant in Fort Mill until last year, when it shut down amid a federal investigation, laying off 540 workers and shifting operations to a distribution center.
Leiner CEO Rob Reynolds said the bankrupt company will entertain other offers until Monday, when an auction will be held in New York as part of its Chapter 11 bankruptcy process that began in March.
"We expect to have at least one other active participant in the bidding process," Reynolds told The Herald Thursday. "They've also submitted a qualified bid."
Reynolds would not disclose the second bidder's identity but said it is a "substantial company in the same industry."
Officials with NBTY could not be reached for comment Thursday.
Buyer could leave Fort Mill
Because Leiner leases the building that once housed its Fort Mill plant in Lakemont Business Park off Carowinds Boulevard, Reynolds said its fate is unknown.
"The possibility exists that the buyer will assume the lease and have operations in Fort Mill," he said. "They may not. The best way to put it right now is that it's unclear."
The proposed sale could signal a conclusion to a tumultuous 18 months for the California-based drug and vitamin maker. Last January, an employee in the Fort Mill plant reported violations of good manufacturing practices to the FDA, a federal affidavit states.
A federal investigation at the Fort Mill plant followed and violations were found, including allowing drugs that failed quality tests to remain in the market, failing to adequately train staff, not cleaning equipment to standards and not identifying black specks found in some pills, according to an FDA report obtained by The Herald.
The company's over-the-counter products formerly were sold as store brands at Wal-Mart, CVS, Costco and other retailers. Common painkillers (ibuprofen and acetaminophen) and allergy medication (loratadine) were among the drugs listed in the report.
However, as part of a guilty plea Leiner entered last month, the U.S. Justice Department said there was no evidence the drugs in question presented a public health risk, according to court documents. Leiner pled guilty to mail fraud and agreed to pay a $10 million fine. No company executives face jail time.
After the FDA probe, Leiner shut down all over-the-counter drug manufacturing and distribution. It recalled all over-the-counter products and ceased all drug production.
Reynolds, who replaced ex-CEO Bob Kaminski who resigned early this year, said the proposed sale is an encouraging step.
"It's been a very painful year. A lot of good people lost their jobs," Reynolds said. "This is a company that has experienced the type of issues that would have brought down most companies. But based on the efforts of our employees and our customers, we've overcome a lot. ... This is a good outcome under the circumstances."