(Yicai Global) April 27 -- State-owned China National Cereals, Oil and Foodstuffs Corporation, better known as COFCO, may buy two of Yinlu Foods Group’s struggling product lines from Nestle, Beijing Business Today reported, citing industry insiders.
Switzerland’s Nestle, which owns all of Xiamen-based Yinlu, is looking to offload its lactose-free peanut milk and its traditional eight-treasure porridge operations, while keeping its instant coffee business, the report said today. No sales price was given, but Yinlu could be valued at around USD1 billion, according to market speculation last month.
Sales of Yinlu's peanut milk and porridge have been falling since 2015, and last year only reached CHF700 million (USD720 million), according to Nestle.
It would be difficult for an ordinary firm to take over a company the size of Yinlu amid the coronavirus epidemic, the report said, citing Zhu Danpeng, an independent analyst of China's foods sector. It would need a state-owned enterprise to acquire it, he added.
COFCO could be a suitable match as its beverage business is relatively weak, Zhu said. If synergies between Yinlu and its bottled Coca-Cola line were pursued, the Beijing-based firm might see an improvement in its performance.
Nestle paid CNY1.5 billion (USD211.8 million) for 60 percent of Yinlu in 2011. It took total control when it paid an undisclosed amount in two share issues between 2017 to 2018. But since the takeover, Yinlu has failed to deliver.
Editor: Kim Taylor