Nestle to spend $1.7 billion for controlling stake in China’s candy maker
11 Jul 2011
Nestle SA, the world's largest food company, yesterday said that it will buy a controlling 60-per cent stake in Chinese snack and candy maker Hsu Fu Chi International Ltd, for about $1.7 billion in cash.
Founded in 1992 by four Taiwanese brothers, Dongguan, Guangdong-based Hsu Fu Chi makes candies, cakes and sachima pastries. The company also produces and sells nuts, groceries, and food additives, processes agricultural products, produces and sells plastic products and plastic packaging materials, as well as is in the business of production, storage, and sale of foodstuff, fruits and vegetables, processed meats, and poultry and food commodities.
Vevey, Switzerland-based Nestlé is offering to pay S$4.35 per share for 43.5 per cent of the listed shares, a premium of 8.7 per cent to Hsu Fu Chi's 1 July closing price.
Nestle will then buy 16.48 per cent of the 56.48 per cent held by the Hsu family. The Swiss food giant has secured irrevocable undertakings from the two largest independent shareholders - Arisaig Partners Holdings and subsidiaries of the Baring Asia Private Equity Fund which hold 9 per cent and 16.5 per cent respectively.
Hsu Fu Chi said that the Hsu family will retain 40 per cent in the company under a joint venture deal with Nestle and Hsu Fu Chi's current CEO and chairman, Hsu Chen, will continue to run the company under the joint venture.
Nestle has been in on-and-off talks with Fu Chi, and Illinois-based Kraft was also reportedly interested in acquiring a minority stake in Hsu Fu Chi.
