Nestle offers $1.7b for 60% of Chinese candy company

Under the proposed deal, Nestle would buy a 43.53% stake held by a collection of shareholders, including Baring Private Equity and Bain affiliate Arisaig Partners, and a 16.48% interest owned by the Hsu family. This would leave the family with a 40% stake. The company would be de-listed from the Singapore Stock Exchange and operated as a joint venture.

The agreement would still require approval from China's Ministry of Commerce as well as Cayman Island courts, where Hsu Fu Chi is incorporated, and company shareholders. A Hsu Fu Chi spokeswoman said that, even if the shareholders agree to a delisting, the joint venture plan would fall through without support from Chinese regulators.

Shares in Chinese companies listed on overseas bourses have been hit by recent accounting scandals at a few firms. In a number of cases, management have taken advantage of the low trading multiples and launched privatization plans.

Baring invested $135 million in Hsu Fu Chi in late 2009, becoming a 16.5% shareholder. Gordon Shaw, managing director of Baring's Shanghai office, told AVCJ in May 2010 that the private equity firm "took advantage of the relatively lower price-to-earnings multiples found in Singapore." He added that Baring would help Hsu Fu Chi to realize its full value by addressing past deficiencies in HR and strategic planning.

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• Topics
• Greater China
• Consumer
• PIPEs
• Baring Private Equity Asia
• Bain Capital Asia