FT story on a "bolt-on deal" for Nestle:
Nestlé underlined its determination to expand in fast-growing emerging markets with the acquisition of a majority stake in one of China’s best-known regional foods groups.
Nestlé said the deal to buy 60 per cent of family-owned Yinlu Foods Group would spearhead its push into products geared to local tastes. Yinlu, which has had a long association with Nestlé as a co-manufacturer of ready-to-drink Nescafé instant coffee, makes ready-to-drink peanut milk and ready-to-eat canned rice porridge.
No price for Yinlu, which is based in China’s south-east Fujian province, was revealed. Analysts’ estimates for the value of the stake in Yinlu, which has annual sales of about SFr750m ($835m), ranged between SFr540m and SFr1bn.
The deal will deepen Nestlé’s penetration in China, where the Swiss group is already known for its international Nescafé, Maggi and Kit Kat brands, as well as some products sold only domestically.
Paul Bulcke, Nestlé’s chief executive, said the deal “demonstrates our long-term investment in China and our commitment to further developing local brands.”
Analysts said the transaction was another example of multinationals keen to grow in China trying to make or acquire products to suit local consumer tastes.
Nestle is an interesting company, what with the move into pharmanutricals (pharma inserted into foods to make therapy and eating one--sounds weird but it has huge applications in developing regions where nutrients are hard to get, as are drugs) and its aggressive push onto the table of the emerging global middle class.
Nestle has been in China for 20 years and employs 14,000 workers there in 23 factories, but it still feels the need to make buys like this to take full advantage of the growth of the middle class, which likes to eat better, use more electrical appliances, drive cars - for the first time, etc.
I always like to keep an eye on these guys.They think ahead nicely, which is why Nestle is the world's biggest food company. Started in 1867 by Henri Nestle in Switzerland. He makes the first milk food for a baby and uses it to save his neighbor's child. Nestle is also one of the most boycotted companies in the world. Why? Food is a very touchy subject - as are babies.