The purchase would be Nestle SA's largest acquisition in China, where Hsu Fu Chi's sales grew more than three times faster than Nestle's worldwide sales during the most recent fiscal year. [Photo / China Daily]

SINGAPORE/HONG KONG--Nestle, the world's largest food company, offered to buy 60 percent of Chinese candies and pastries group Hsu Fu Chi International for about $1.7 billion to expand in one of the world's biggest consumer markets.

The Hsu family, which owns 56.48 percent of the Singapore-listed company, will sell a 16.48 percent stake to Nestle, but the family will retain 40 percent in the firm under a joint venture deal, Hsu Fu Chi said in a statement.

The agreement would still require approval from China's Ministry of Commerce (MOC), Cayman Island courts, where the company is incorporated, and shareholders, Hsu Fu Chi spokeswoman Christine Sun said from Dongguan in China's southern Guangdong province.

"If?the MOC?doesn't give approval, we won't be able to go ahead with the joint venture. Even if the shareholders agree to the delisting, we ultimately will still need the MOC's approval," she told Reuters.

Nestle will also buy 43.52 percent from shareholders such as Baring Private Equity and asset manager Arisaig and together with the Hsu family will seek to delist the firm.

The deal, which values Hsu Fu Chi at S$3.46 billion ($2.83 billion), comes a few weeks after British drinks group Diageo won approval to raise its stake in Sichuan Shuijingfang, China's fourth largest white spirits group.

Nestle has no intention to make major changes to the business or cut jobs, Hsu Fu Chi said.

Dongguan-based Hsu Fu Chi makes snacks such as peanut candies, pop jellies and sachima rice snacks.

The company's shares were up 9.8 percent on Monday after a trading halt, which was in place since July 1, was lifted.

Analysts have said in the past it would make sense for Nestle to buy a company in an emerging market due to sluggish sales at home.

Nestle has been sitting on a pile of cash since it sold its remaining stake in eyecare group Alcon. In April, it said it planned to take a 60 percent stake in China's Yinlu Foods Group for an undisclosed price.

Credit Suisse advised Nestle. The directors of the Singapore-listed company plan to appoint an independent financial adviser.