Nestle acquisition of Hsu Fu Ci, Largest China Acquisition in the Food Industry

Today (11 / 7), the acquisition of two companies currently the world's largest comestible namely Nestle and Hsu Fu Chi has been realized in which the two largest companies reached an agreement after over 2 years experience in the process of negotiating a long journey. In the agreement, Nestle Inc. agreed to a 60% amount of shares owned by the Hsu Fu Chi with a purchase value of 1.7 billion dollars.

Largest China Acquisition In Food Industry

Nominal acquisition of 1.7 billion dollars was recorded as the number of the largest in China's food industry until now and is one of the largest acquisitions of Chinese companies at this time. Many people assessing step acquisitions made by Nestle is a major step in the company's "master" comestible markets in Asia today.

For Nestle, the nominal amount of shares by 60% mastery is a strategic step to remember before the acquisition, the amount of the sale of Nestle products in both China and some Asian countries like Singapore, South Korea and Japan is still less than the Hsu Fu Chi. The reverse side, for Hsu Fu Chi step is considered increasingly to be the momentum to beat perennial rivals in the Chinese food industry such as Tungyi and Want Want China Holdings.

Next Plans : Construction of Factory

After a 60% shareholdings of Hsu Fu Chi, the next step to be taken by Nestle is to plan the construction of 23 factories in several provinces in China. The plan is expected to be completed in 2020 and is a mega step snacks business in the industrial sector in Asia. Of the 23 mills that will be planned to be built, as many as 14 thousand workers are expected to be needed.

By looking at the plans announced by Nestle Inc. is indicating that it would be an opportunity for the company to take over the factories owned by Hsu Fu Chi. Hsu Fu Chi biggest factory is currently located in Guangdong province. Total factory owned by Hsu FuChi in China there were 56 factories with 13 thousand the number of retail stores throughout China.

Last year, Hsu Fu Chu achieve profits rise 31% to 93 million dollars. Opportunities rise in profits expected to continue this year. According to Euromonitor International, the demand for sweets and cakes in China for this year is expected to rise by 5% due to speculation the increase in domestic demand in times of comestible current summer and year-end. Factors increasing the volume of both local and international tourists are also a factor for the increase in demand for snacks in China.