Business

China clears Nestle $1.7bn bid for confectionery maker

Chinese supermarket
Image caption Nestle has been trying increase its presence in China with acquisitions in food companies

Chinese antitrust regulators have approved Nestle's $1.7bn (£1.1bn) offer for sweets and snack maker Hsu Fu Chi International.

Swiss food company Nestle made the offer for a 60% stake in the Singapore-listed Hsu Fu Chi in July.

The approval comes a month after the ministry of commerce cleared Yum Brand's takeover of Little Sheep Group.

Analysts said the approval is further evidence that China could be opening up to foreign buyers.

In 2009, Coca-Cola's $2.4bn bid for China's Huiyuan Juice Group was rejected by the government because of concerns over competition.

"There had been a concern that if you were doing a transaction that involved a popular Chinese brand it would be difficult to get that through," said Frank Schonevald from McDermott, Will and Emery law firm in Shanghai.

"This deal, together with the earlier Yum Brands-Little Sheep transaction, shows that's not the case."

China ambitions

The Nestle deal is one of the biggest by a foreign company in China.

Dongguan-based Hsu Fu Chi makes sugar sweets, snacks and cakes. Under the agreement Nestle will pay 4.35 Singapore dollars per share, an 8.7% premium on the 1 July closing price.

Trading of Hsu Fu Chi's shares was halted when the offer from Nestle was announced.

Nestle already has a major presence in China. Earlier this year, it acquired a 60% stake in food maker Yinlu Food Group.

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