Nestlé Negotiating Xu Fuji Not To Be Watched Needs to Overcome Many Obstacles

Following the announcement of the acquisition of a 60% equity interest in Yinlu Food in April this year, Nestlé once again aimed its sights at Xu Fuji, a well-known Chinese candy maker. According to sources, Nestlé is currently negotiating with Xufuji International Group and trying to acquire all the shares of the latter. According to the current stock price of Xu Fuji, Nestle will pay up to US$2.6 billion in chips. However, because of the differences between the two sides, coupled with policy barriers, Nestle's acquisition plan is not favored.

According to incomplete statistics, Xu Fuji and Nestlé’s share in the candy market ranks third and fifth respectively. Industry insiders point out that if the acquisition is successful, it will create a competitive pattern for the domestic confectionery industry “ Subversive" effect.

For this acquisition, Nestlé and Xu Fuji are reluctant to respond positively. “We have no comment on this matter.” Yesterday, He Wei, spokesman for Nestle China Limited, told reporters. Compared to the previous acquisition of a 60% stake in Yinlu Food, the attitude of Nestlé was intriguing.

Previously informed sources pointed out that the current negotiations between Nestle and Xu Fuji are at a delicate stage and still need to overcome many obstacles. Even if the two parties reach an agreement, according to China's anti-monopoly law, Nestle's acquisition of Xu Fuji needs to be reviewed by the Ministry of Commerce. Due to the huge scale of mergers and acquisitions, Nestle's acquisition road is full of thorns. Prior to this, the Ministry of Commerce rejected the $2.4 billion Coca-Cola acquisition of Huiyuan Fruits.

This year, foreign companies accelerated their M&A in the Chinese market. Among them, the consumer sector has become the biggest hot spot, including Nestlé’s acquisition of Yinlu, Yum!’s acquisition of Little Sheep, and Diageo’s holding of Shuijingfang. In addition to the latter’s “Deregulation” by the Ministry of Commerce, the rest are still pending.