Yesterday Nestlé announced that it has signed a partnership agreement with the founding family of Hsu Fu Chi, a leading manufacturer and distributor of confectionery products in China, listed in Singapore. Under the proposed agreement, Nestlé intends to acquire 60% of Hsu Fu Chi whilst the Hsu family will own the remaining 40%. Hsu Fu Chi’s current CEO and Chairman, Mr. Hsu Chen, will continue to lead the company in the new partnership.
Nestlé also proposes to acquire the shares of Hsu Fu Chi’s independent shareholders, representing 43,5% of the shares in Hsu Fu Chi. Nestlé offers a cash price of SGD 4,35 per Hsu Fu Chi share which represents a premium of 24,7% over the volume-weighted average share price over the last 180 days. If the scheme is approved by the independent shareholders, Nestlé will acquire in addition a 16,5% stake in Hsu Fu Chi from the Hsu family’s current holding of 56,5%.
The total price to be paid by Nestlé to acquire 60% of Hsu Fu Chi is approximately SGD 2,1 billion (USD 1,6 billion).
Hsu Fu Chi’s produces sugar confectionery, cereal-based snacks, packaged cakes and the traditional Chinese snack sachima. Hsu Fu Chi’s products are tailored to Chinese consumers’ needs and habits, and complement Nestlé’s existing product portfolio in China, which includes culinary products, soluble coffee, bottled water, milk powder and products for the foodservice industry.
Nestlé CEO Paul Bulcke said “This proposed partnership will greatly reinforce our presence in China. It combines Hsu Fu Chi’s strong brands, its large portfolio of products at affordable price points, its efficient operations and entrepreneurship with our proven innovation and renovation capabilities, supported by our R&D Centres in China. It also demonstrates our long-term commitment to China and enhances our ability to grow our portfolio of international and local brands in this dynamic market.”
Nestlé has been present in China for over 20 years and today operates 23 factories, two R&D Centres and employs 14,000 people. Main Nestlé brands in China include Nescafé, Nan and Maggi as well as local brands such as Totole, Haoji and Dashan.
According to Asia Pacific Brands Report Nestlé occupies the 9th position in the list.