Nestle formally signed an acquisition agreement with Yinlu on September 8, 2011, which will strengthen its competitiveness in domestic candy market.

Guangzhou, Guangdong -- (SBWire) -- 10/13/2011 --Nestle (China) Ltd., (Nestle), the largest food company of the world, formally signed the acquisition agreement with Yinlu Food Group Co., Ltd. (Yinlu), a large producer of peanut milk and canned rice porridge on September 8, 2011. According to the acquisition agreement, Nestle will buy 60% shares of Yinlu. Meanwhile, Nestle and Yinlu will respectively invest USD240 million and USD160 million in constructing new plants. Moreover, the acquisition will be finished in November 2011.

Both Nestle and Yinlu believe that the acquisition will be helpful for them to exploit more shares in domestic and overseas food markets. Nestle is attracted to the acquisition of Yinlu because of Yinlu's good brand effect in protein beverage and eight treasure congee, stable product quality and the excellent management capability. The acquisition can not only help Nestle exploit domestic markets of protein beverage and eight-treasure congee but also strengthen its brand influence in China.

On the other hand, the acquisition also can help Yinlu expand its market share in a short term. According to the acquisition agreement, Yinlu will continue using its current brand and it will exploit food markets in the central and western regions of China through Nestlé’s existing production bases and the new plants invested by Yinlu and Nestle in these regions.

As the largest bottled water producer in the world, Nestle has also been exploiting domestic market of bottled water since 1997. Moreover, Nestle is also making efforts to expand domestic candy market shares through the merger of Hsu Fu Chi International Ltd. (Hsu Fu Chi), a large candy producer in China. Nestle announced to spend USD1.7 billion to buy 60% shares of Hsu Fu Chi on July 11, 2011.

It is obvious that Nestle will strengthen its competitiveness in domestic candy market after the acquisition. Based on the above facts, Nestle may continue to exploit new markets in China through acquisitions, so as to keep its profit increasing fast.

More news in CCM’s September Issue of China Agriculture Investment Bimonthly Report:

- The value-added tax was issued to reduce cost and improve profit of enterprises, especially for agricultural produce enterprises.

- How to regulate and control the price of agricultural produces is the key to the development
of the agricultural produce industry.

- The Notice issued recently encourages Chinese agricultural enterprises' oversea investment.

- Policy on industrial integration prompts phosphate fertilizer manufacturers to add investment in phosphorus ore resources.

- The Chinese government probably is to increase export tariff for binary compound fertilizer, primarily due to the rising price driven by the soaring export volume.

- The Entry Criteria raises the entry cost of phosphate & ammonium industry.

- ZARD announces to purchase 53.99% shares of Henan Dishen.

- Cangzhou Dahua declares that ChemChina Agchem will become its controlling shareholder.

- Winall Hi-Tech is to purchase 54.05% share of Tieyan Seed with USD3.67 million.

- China will implement an entry criterion for the fruit and vegetable juice concentrate (pulp) processing industry.

- Bright Food and Manassen Foods formally signed an acquisition agreement on August 29, 2011.

- Sanyuan Foods and Macrolink Holding announced to take over Hunan Taizinai.

- Nestle formally signed an acquisition agreement with Yinlu on September 8, 2011.

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