Nestle to acquire Hsu Fu Chi
By Jin Jing |
July 12, 2011, Tuesday
|
Print Edition
Print Edition
NESTLE SA, the world's largest food company, yesterday said it would buy 60 percent of Chinese confectionery firm Hsu Fu Chi International Ltd for S$2.1 billion (US$1.7 billion).
Nestle offered S$4.35 for each share of Singapore-listed Hsu Fu Chi, an 8.8 percent premium over its closing price.
The Switzerland-based food and beverage company said it has won support from Hsu Fu Chi's two biggest independent shareholders. The deal still needs China's regulatory approval under an anti-monopoly review, something that Li Yi, research analyst with Euromonitor in Shanghai, thinks is likely as the "deal may further promote consolidation of the overall market."
Nestle said the proposed deal would reinforce its presence in China. "Hsu Fu Chi's products are tailored to Chinese consumer needs and complete Nestle's existing product portfolio in China," it said in a statement.
Guangdong-based Hsu Fu Chi, founded by the Hsu family from Taiwan island, is one of China's leading snack and sugar confectionery makers. Its 16,000 employees work in four factories in China and it generated a sales revenue of 669 million Swiss francs (US$799 million) last year.
"Hsu Fu Chi is very strong in its nationwide distribution network, including in third- and fourth-tier cities as well as in rural areas that Nestle wants to enter,'' said Li. "It is also strong in catering to local needs not only in product tastes but also in the unique mix-and-match selling mode, which could benefit Nestle which lacks local brands."
According to Euromonitor, China's confectionery market may grow 38 percent to 88 billion yuan (US$13.6 billion) by 2015.
Hsu Fu Chi was the second largest confectionery maker in China in 2009 with a market share of 4.2 percent, compared to Mars Inc's 15.5 percent and Nestle's 1.9 percent.
Nestle, the maker of Nescafe instant coffee, operates 23 factories, two R&D centers and employs 14,000 people in China. Last year, it had sales of 2.8 billion Swiss francs.
Nestle offered S$4.35 for each share of Singapore-listed Hsu Fu Chi, an 8.8 percent premium over its closing price.
The Switzerland-based food and beverage company said it has won support from Hsu Fu Chi's two biggest independent shareholders. The deal still needs China's regulatory approval under an anti-monopoly review, something that Li Yi, research analyst with Euromonitor in Shanghai, thinks is likely as the "deal may further promote consolidation of the overall market."
Nestle said the proposed deal would reinforce its presence in China. "Hsu Fu Chi's products are tailored to Chinese consumer needs and complete Nestle's existing product portfolio in China," it said in a statement.
Guangdong-based Hsu Fu Chi, founded by the Hsu family from Taiwan island, is one of China's leading snack and sugar confectionery makers. Its 16,000 employees work in four factories in China and it generated a sales revenue of 669 million Swiss francs (US$799 million) last year.
"Hsu Fu Chi is very strong in its nationwide distribution network, including in third- and fourth-tier cities as well as in rural areas that Nestle wants to enter,'' said Li. "It is also strong in catering to local needs not only in product tastes but also in the unique mix-and-match selling mode, which could benefit Nestle which lacks local brands."
According to Euromonitor, China's confectionery market may grow 38 percent to 88 billion yuan (US$13.6 billion) by 2015.
Hsu Fu Chi was the second largest confectionery maker in China in 2009 with a market share of 4.2 percent, compared to Mars Inc's 15.5 percent and Nestle's 1.9 percent.
Nestle, the maker of Nescafe instant coffee, operates 23 factories, two R&D centers and employs 14,000 people in China. Last year, it had sales of 2.8 billion Swiss francs.
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