China approves Nestlé $1.7-bn acquisition of local candy maker Hsu Fu Chi

China today approved Nestlé proposal to acquire a controlling stake in local snack and candy maker Hsu Fu Chi International, one of the few rare approvals recently passed by Beijing.

Singapore-listed Hsu Fu Chi today said that China's commerce ministry had approved Nestlé purchase of a 60-per cent stake in the company. The acquisition is Nestlé biggest deal in China to date.

In July, the Vevey, Switzerland-based Nestlé , the world's largest food company, offered to buy 60-per cent of Hsu Fu Chi, for about $1.7 billion in cash.

Nestle will then buy 16.48 per cent of the 56.48 per cent held by the Hsu family. The Swiss food giant had secured irrevocable undertakings from the two largest independent shareholders - Arisaig Partners Holdings and subsidiaries of the Baring Asia Private Equity Fund who hold 9 per cent and 16.5 per cent respectively - that they would sell their stakes to the Swiss firm.

Nestle has been in on-and-off talks with Fu Chi for nearly a year, while Illinois-based Kraft was also reportedly interested in acquiring a minority stake in Hsu Fu Chi.

The Hsu family will retain 40 per cent in the company under a joint venture deal with Nestle and Hsu Fu Chi's current CEO and chairman, Hsu Chen, will continue to run the company under the joint venture.