Nestle is weighing a US$1 billion sale of two ailing Chinese consumer brands after failing to turn them around
- The food giant is reviewing its stakes in Hsu Fu Chi and Yinlu, according to people familiar with the plan
- Controlling stakes in the two brands could be sold for US$1 billion, the people said
Nestle is weighing options including a sale for two ailing Chinese units after years of attempting to turn them around, people familiar with the matter said.
The food giant has been reviewing its ownership of Hsu Fu Chi, a local confectionery brand, and Yinlu, known for its ready-made Chinese porridge, according to the people. It is seeking more than US$1 billion for its controlling stakes in the two companies, the people said, asking not to be identified because the information is private.
Nestle acquired both companies in 2011 as it sought to tap burgeoning demand in China, only to find itself confronted with sluggish growth a few years later. Since becoming chief executive officer in 2017, Mark Schneider has been weeding out the Swiss company’s portfolio, jettisoning assets such as US chocolate brands, a dermatology business and a life insurance unit for about US$15 billion total.
Nestle, which makes Nespresso coffee and Gerber baby food, has made almost two dozen divestments under Schneider. It could opt to sell only part of its stakes in one or both of the Chinese units, according to one of the people.
No final decisions have been made, and there’s no certainty the deliberations will lead to a transaction, the people said. A spokesman for Nestle declined to comment.
Mergermarket reported earlier that Nestle was conducting a strategic review of the Yinlu business, citing unidentified people.