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UPDATE 1-GNC favors IPO as Bright Food walks away - source

* GNC likely to pursue IPO - source

* Bright Food talks end, but could resume - source (Adds background, GNC declined to comment)

PHILADELPHIA, Jan 21 (Reuters) - U.S. vitamin retailer GNC Holdings Inc is favoring an initial public offering after China’s Bright Food Group Co walked away from talks to buy the company, a source familiar with the negotiations said on Friday.

Bright Food had been in talks to buy GNC for about $2.5 billion, but it has essentially walked away from discussions, the source said. The talks could be restarted, but an IPO looks like the most likely route for the retailer, said the source, who was not authorized to speak to the media and declined to be named.

The potential acquisition of Pittsburgh-based GNC, which is owned by Ares Management and the Ontario Teachers’ Pension Plan Board, had taken longer than expected and Bright Food and GNC failed to agree on a final price, the source said.

GNC declined to comment.

The Financial Times had reported on Thursday that talks with Bright Food had ended. Bloomberg reported on Friday, however, that talks were continuing, citing a Bright Food official.

GNC, which sells nutrition supplements, vitamins, sports drinks and other diet products through 7,100 stores worldwide, had been exploring an initial public offering, as well as an outright purchase. [ID:nN06243134]

In September, it filed registration papers with the U.S. Securities and Exchange Commission for an IPO to raise up to $350 million.

Ares Management LLC and the Ontario Teachers’ Pension Plan bought GNC in 2007 from Apollo Management LP [APOLO.UL] in a deal with a total enterprise value of $1.65 billion. Apollo had twice previously tried to take GNC public.

Bright Food controls four listed companies, including Bright Dairy & Food Co 600597.SS. It recently had been in talks to buy Britain's United Biscuits for about $3.2 billion, but walked away. [ID:nTOE68Q02A]. (Reporting by Jessica Hall, editing by Gerald E. McCormick, Dave Zimmerman) (For more M&A news and our DealZone blog, go to here)

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