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NESTLE

China approves Nestlé sweetmaker bid

Swiss food giant Nestlé said on Thursday it has received the green light to buy Chinese sweetmaker Hsu Fu Chi International, in one of the biggest ever foreign takeovers of a local company.

Nestlé agreed in July to buy a 60-percent stake in Singapore-listed Hsu Fu Chi for 1.4 billion francs ($1.7 billion) to boost the group’s footprint in China.

The Chinese commerce ministry this week approved the deal, which Euromonitor analysts say will make Nestlé the second largest confectionery player in China by retail sales after Mars, the companies said in separate statements.

It is the latest successful foreign takeover of a major Chinese brand after the commerce ministry last month approved the buy-out of Chinese hot pot chain Little Sheep by US fast-food giants KFC and Pizza Hut.

But Beijing has also blocked foreign takeover deals.

In 2009, it vetoed a $2.4 billion bid by Coca-Cola to take over beverage
maker Huiyuan Juice Group, saying the deal would have led to higher prices and
a smaller choice of products.

Analysts have suggested the government uses its tough anti-monopoly laws to prevent foreign firms getting a major stake in key sectors of the economy.

China’s anti-monopoly law requires firms to receive government approval before they can merge if their combined global revenue exceeds 10 billion yuan ($1.55 billion) or if their revenue in China tops two billion yuan.

Authorities also review deals if two or more of the firms have each reported more than 400 million yuan of revenue in China in the previous fiscal year.

Nestlé (China) Ltd spokeswoman Nancy He said the deal “demonstrates Nestlé’s long-term commitment to China and enhances our ability to grow our portfolio of international and local brands in this dynamic market.”

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NESTLE

‘Unlimited resources’: Switzerland’s Nestle goes vegan

Swiss food giant Nestle, which has made billions with dairy products, said Monday it will host start-ups that want to develop vegetarian alternatives.

'Unlimited resources': Switzerland's Nestle goes vegan
Photo: SEBASTIEN BOZON / AFP

Nestle could thus find itself at the forefront of a sector that has strong growth potential, an analyst commented.

It plans to open its research and development (R&D) centre in Konolfingen, Switzerland to “start-ups, students and scientists” a statement said.

In addition to testing sustainable dairy products, the group plans to encourage work on plant-based dairy alternatives, it added.

Chief executive Mark Schneider was quoted as saying that “innovation in milk products and plant-based dairy alternatives is core to Nestle's portfolio strategy.”

The group unveiled a vegetable-based milk that had already been developed with the process, and technical director Stefan Palzer told AFP it planned to focus on 100-200 such projects a year.

Jon Cox, an analyst at Kepler Cheuvreux, noted that while Nestle had missed some consumer trends in the past, it has now “taken something of a lead in the plant-based alternative market for food”.

And “given its pretty much unlimited resources, Nestle is going to come out one of the winners in the space,” Cox forecast in an e-mail.

Nestle said that “internal, external and mixed teams” would work at the R&D centre over six-month periods.

Nestle would provide “expertise and key equipment such as small to medium-scale production equipment to facilitate the rapid upscaling of products for a test launch in a retail environment,” it added.

The Swiss food giant has long been known for its dairy products, but faced a boycott in the 1970s for allegedly discouraging mothers in developing countries from breastfeeding even though it was cheaper and more nutritious than powdered formula.

On Monday, the group's statement also underscored that the research initiative was part of its commitment to help fight global warming.

“As a company, we have set ambitious climate goals. This is part of our promise to develop products that are good for you and good for the planet,” it said.

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