Now it's official, Nestlè has launched the conquest of China. The largest food company in the world, based in Switzerland, has reached an agreement to purchase Hsu Fu Chi, the largest producer and distributor of Chinese sweets.
The Swiss giant has in fact announced that it has entered into a partnership with the Hsu family.
The agreement provides that Nestlè will take over 60% of the Chinese company, while the previous owners will still hold 40%. Furthermore, Mr. Hsu Chen, current CEO and Chairman, will continue to lead the Sino-Swiss company.
The Swiss group, for this operation, has put on the plate about 2,1 billion dollars (almost 1,7 million Swiss francs), offering $4,35 per share of the Chinese company, listed on the Singapore stock exchange. An 8,8% premium to the stock price at Friday's close.
“Hsu Fu Chi has a well-structured network and also a good number of outlets in China, which is certainly what Nestle is aiming for,” commented Eugene Ng, an analyst in Singapore for UOB Kay Hian Pte Ltd., who he adds, “It seems to me a very good deal for Nestlè, given the comparison with the evaluation of the competitors, Tingyi and Want Want”.
Shares of Hsu Fu Chi in Singapore today gained 35 cents, reaching the offer price of $4,35. While, of its competitors, Dongguan traded at 23,7 times earnings, according to Bloomberg data, compared to 34,7 times for rival Foodmaker Tingyi and 36 times for Want Want China Holdings Ltd., maker of snacks and flour supplier.
