Companies

Candy maker confirms acquisition talks with Nestle

(Xinhua)
Updated: 2011-07-05 11:22

SINGAPORE -- Chinese candy maker Hsu Fu Chi, which is listed in Singapore, confirmed on Tuesday that it is in acquisition talks with Swiss food giant Nestle.

Nestle also separately confirmed the talks on Monday.

Founded in 1992, Hsu Fu Chi has been the industry leader in China with a market share of 6.6 percent in 2009. It has a market capitalization of S$3.18 billion ($2.59 billion). If the deal is finally realized, it will be one of the biggest takeovers of a Chinese firm by a foreign company.

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Hsu Fu Chi, requested a voluntary trading suspension of its shares on the Singapore exchange on Monday, saying in a statement later that the move was to "avoid abnormal fluctuation over Hsu Fu Chi's share price."

Shares of the company closed at S$4 ($3.25) per share on July 1. It has gained over 7 percent since the start of the year, and more than fivefold since its listing in 2006 at 85 Singapore cents.

"The company wishes to inform shareholders of the company that it has engaged in preliminary confidential discussions with Nestle S.A. in relation to a possible transaction relating to the company, which may or may not lead to an offer being made for the shares of the company," the company said.

Nestle later also issued a statement to say that "it is engaged in preliminary confidential discussions with Hsu Fu Chi" but would not divulge any details.

Hsu Fu Chi said it "has long been pursuing strategic talks with potential confectionery partners in the market. Interactive contacts have been conducted with counterparts from Japan, Europe, and the US for years under a continued policy," including Nestle.

Such efforts are aimed at the sustained development of the enterprise and its brands, it added.

Hsu Fu Chi's net profit in the first quarter this year hit $32 million, with revenues at $232 million. For the year ending June 30 last year, profits hit 602 million yuan ($93.16 million) and revenues at 4.3 billion yuan.