October 17, 2006

Malaysia's F&N expands dairy business in US$84 million deal with Nestle 

Malaysia's Fraser and Neave Holdings Berhad, a major beverage company in Malaysia, announced Monday (Oct 16) it is taking over Nestle's canned milk, chilled dairy and juice business in Thailand for US$84 million.

F&N intends to fund its acquisitions through internal funds and borrowings.

With the acquisition, the company would be able to double the annual turnover at its dairy division, a company statement said. The deal has opened the way for F&N to gain entry to the Thai market as well as that in Myanmar and Vietnam, the statement said.

Nestle would transfer its sweetened condensed milk brand to F&N in Malaysia, Singapore and Brunei markets and license the group to make and distribute three other milk brands.

In the deal, Nestle has also agreed to divest its 25 percent stake in F&N's Malaysian unit, Premier Milk Sdn. Bhd.

F&N said the deal allowed the company to consolidate its canned milk business and depend less on the Malaysian market.

The deal would more than double the dairies' division annual turnover of US$163 million to more than US$409 million.

Meanwhile, Nestle (Malaysia) Berhad said the deal may affect its turnover in the short-term but not its net profit. Besides boosting operational efficiencies, it would also allow the company to focus on fewer but bigger brands, it said.