While the rest of the world fixates on the latest twists and turns in the Guo Meimei-Red Cross scandal, I thought I’d turn my attention to a couple of cross-border M&A deals in the low-profile but lucrative food sector, one involving global giant Nestle (Zurich: NESN) and the other China’s Bright Food. The Nestle deal has the Swiss giant in talks to purchase Hsu Fu Chi (Singapore: HSFU), a Singapore-listed Chinese candy maker with a market capitalization of $2.6 billion. (English article) The other deal has Bright, which has been on the acquisition trail for a while (previous post) considering an offer for Australia’s Treasury Wine (Sydney: TWE). From a general perspective, I like cross-border food deals as they’re usually straightforward because they involve simple products most often confined to a single market. In the case of multinationals like Nestle 
buying into China, such deals are also probably welcome by the Chinese government, since having a name like Nestle behind a product offers guarantees of quality control in a market plagued by a continuous stream of scandals over tainted food. For Chinese companies like Bright looking to expand globally, such deals are relatively easy to execute and operate as they usually involve healthy companies and disruption to operations are minimal. My one concern in Bright’s case is that, in its clear enthusiasm to buy an overseas company after several failed efforts, it could end up overpaying when it finally completes a purchase and then, in its eagerness to show investors it made the right decision, implement management and other changes that create unexpected problems. But at least for now, both of these deals, if they happen, look like positive steps for all companies involved, and we could see other multinationals like Kraft (NYSE: KFT) follow on the inbound M&A trail, and Chinese names like Tsingtao Beer (Shanghai: 600600) follow on the outbound trail in the next 1-2 years.
Bottom line: Potential cross-border M&A by Nestle and Bright Food look like smart deals in the straightforward consumer foods sector, augering more such deals in the next 1-2 years.
当大家都在关注郭美美和红十字会丑闻时，我更想关注低调但利润丰厚的食品行业的几宗跨国并购案，其中一宗与全球食品巨头雀巢<NESN.VX>有关，另一宗与中国的光明食品集团有关。雀巢正洽购新加坡上市的中国糖果制造商徐福记<HSFU.SI>，後者市值为26亿美元。光明考虑收购澳大利亚葡萄酒公司Treasury Wine<TWE.AX>。整体而言，我看好跨国食品公司并购，由於产品线简单，市场单一，因此并购往往直截了当。在食品跨国并购案中，例如雀巢入境收购中国食品商，此类交易也可能受到中国政府欢迎，因为拥有“雀巢”品牌名称，相当於提供了质量管理保证，而中国食品市场安全问题频发。而对於希望拓展海外市场的光明等中国企业，此类交易通常有品牌形象良好的企业参与，因此并购相对容易进行和操作，运营中断的可能也较小。我对光明并购澳洲葡萄酒商的担忧是，光明此前几宗海外并购失败後，其明显的并购热情可能导致其出价过高，随後，由於光明急切希望向投资者证明其决策正确，在进行管理和其它调整时或造成意想不到的问题。但至少目前看来，如果上述两宗并购得以实现，对所有相关公司都是积极举措，预计未来一两年，卡夫食品<KFT.N>等国际品牌将在中国展开并购，而青岛啤酒<600600.SS>等中国食品商也将出境并购。
一句话：雀巢和光明食品可能进行跨国并购，应该是消费者食品公司的明智之举，预计未来一两年将有更多类似并购交易。
Related postings 相关文章:
◙ Diageo’s China Baijiu Bid: Aiming for the Middle 帝亚吉欧瞄准中国中档白酒市场
◙ Bright Food Sets Table for More M&A Bids 光明食品：高举并购大旗
◙ Unilever Helps China See the Light Behind Free Markets 联合利华帮助中国向市场经济迈进
While drinking my morning coffee this Monday, I came across a China Daily report on the huge migration of young urban professionals to the suburbs of major cities like Beijing and Shanghai in search of affordable homes, and thought about who was likely to benefit from such a move. Based on my own childhood growing up the suburbs of Washington D.C., one of the clearest beneficiaries will be supermarket chains that serve as one-stop-shops for suburban folk who often have to travel big distances to do their buying. The phenomenon seen by the China Daily (
of Guangzhou. Indeed, it was the big-city concentration that led 7 Days and fellow operators like Home Inns (Nasdaq: HMIN) to suffer a case of “Expo hangover”, as their business flattened after a huge bump during Shanghai’s World Expo last year. 7 Days’ deal comes just a month after a much bigger deal that saw Home Inns acquire the Motel 168 in a transaction that valued that company at about $500 million. (
that has forced them to lower costs by adopting more flexible sourcing models and attaining better economies of scale. In Suntech’s case, the company announced it was ending a 10-year solar wafer supply agreement with MEMC just halfway through the agreement. (
After a steady stream of bad news in one of their industry’s worst-ever downturns, solar panel makers Yingli (NYSE: YGE) and Trina (NYSE: TSL) have at least temporarily broken out of the gloom with announcements of two major new deals. The more significant of the two has come from Yingli, which said it will sell 110 megawatts worth of modules to a state-owned Chinese hydropower producer. (
would leave Wang with just the chairman’s title, and will no doubt add fuel to talk over the last year or so that he will soon retire from the company, which seems likely. So, what does it all mean? Probably very little, to be honest, as the top posts at all the major telcos are all held by party officials, many with engineering and technical backgrounds. Li was trained as an engineer, and Xi appears to have spent most of his recent career at the country’s telecoms regulator in various posts. The appointment of such well-connected bureaucrats would normally look good for a company in this highly-regulated market, except that the top ranks at China Mobile’s two rivals, Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA), are also dominated by such bureaucrats. I would say to look for Wang’s retirement by the end of this year, which will deprive it of a charismatic leader but little else. After that happens, look for the company to maintain its current direction which, as I’ve previously reported, could see it finally start to aggressively promote its 3G service if and when it signs a deal to offer an Apple (Nasdaq: AAPL) iPhone for its 3G network.
Media are awash with talk of a potential major leadership shake-up at SMIC (HKEx: 981; NYSE: SMI), China’s top microchip maker, following the death earlier this week of the company’s chairman from cancer. (
As a former specialist reporter in high-tech companies, I just had to take time for a quick look at the latest rumblings around Tom Group (HKEx: 2383), the one-time high-flying media company backed by Hong Kong billionaire Li Ka-shing, whose online unit appears to have entered a massive downward spiral. Most people stopped following Tom Online several years ago when the Beijing-based company officially de-listed from the Nasdaq and was re-integrated with its parent, which thought that investors were unfairly undervaluing the unit’s shares. Chinese media are now reporting that the former Tom Online has just implemented a round of major layoffs, gutting its online sports division, which follows another recent round of big layoffs. (
Waters report this week. The company has good reason to be worried, as negative reports from Muddy Waters have wreaked havoc on a number of company stocks, most recently Sino-Forecst (Toronto: TRE), whose shares have tumbled 85 percent since Muddy Waters issued an early June report questioning its timber holdings. I haven’t examined the numbers as closely as Muddy Waters, but at least so far in this case Spreadtrum seems to be doing some good damage control. The stock actually rose 10 percent in Wednesday trading in New York, and was up slightly after hours putting it actually ahead of where it was before the Muddy Waters report came out. I’ve been relatively bullish on this company, which has shown a number of good initiatives in recent months as it seeks to regain the momentum it captured in 2009 when its stock staged a huge rally under a then-new chief executive. I’m guessing that Muddy Waters saw Spreadtrum shares’ 450 percent rally in 2009 as a bit overblown, even though shares are down 30 percent this year, and was trying to capitalize on concerns about Chinese accounting to try and knock the stock down a few points. But in this case the approach seems to be having little impact.
the spirits’ maker, publicly listed Sichuan Chengdu Quanxing Group, take majority control of the company in a bid to take it onto the national stage. In my view, China is a market that’s really ready for a good, solid mid-tier brand, which is what Diageo specializes in through its stable of solid mid-range brands like Johnnie Walker and Smirnoff. The market is already home to a handful of super high-end brands, most notably Maotai and Wuliangye, which sell for ridiculously high prices of hundreds of dollars per bottle, and are usually pulled out when a host wants to impress his guests at a banquet but are seldom used when friends go out drinking because they’re simply too expensive. After those brands, the market is highly fragmented, with local names usually commanding most of the mid-end market. If Diageo plays its cards right, it should be lining up Shuijingfang, which is already attractively packaged and has some name recognition, as a brand of choice for white-collar Chinese when they go out for a night of drinking. If that works, I could even see Diageo eventually exporting this liquor as an exotic brand for foreigner tipplers looking for a fiery taste of China without having to pay hundreds of dollars for it.
Since being set free earlier this year by its parent Sina (Nasdaq: SINA), Weibo, China’s equivalent of Twitter, has taken a frenzy of initiatives to leverage its wildly popular service to become a viable stand-alone business and eventually make an IPO. I’m a big fan of Weibo, which in its short 2-year life has become a household word among Chinese youth, but I have my doubts about a new plan to launch its service in Japan with a local partner. (
