China Food

Feishilan sells Maisu Jiaer and suddenly presses the “pause button”? The milk powder industry is watching

For fislan, a famous dairy cooperative in the Netherlands, its Meisu Jiaer brand has now reached a key “crossroads”.

Today, Bloomberg quoted “people familiar with the situation” as saying that the plan of fislan to sell its infant nutrition brand FRISO “has stalled due to valuation issues”.

What’s the next step for Missouri? Today, the snack agent contacted the spokesperson and people at the headquarters of fislan to learn more information.

“Not as expected”

First, let’s take a look at Bloomberg’s latest introduction in the evening. According to “people familiar with the situation”, the Dutch dairy giant suspended the divestiture of the business after the shortlisted bidders’ bids failed to meet expectations. Fislan had hoped that the valuation could reach US $2billion (about RMB 12.639 billion).


The above-mentioned people familiar with the situation said that the final decision is still not made, and fislan can resume the sale of the brand of Meisu Jiaer at any time.

资料显示,在今年早些时候,菲仕兰就正式启动了出售流程,并希望在今年内完成交易。为什么如今会传来停滞的消息呢?


Rising interest rates and the conflict between Russia and Ukraine have hit the sentiment of global investors. In addition, the British consumer goods giant and Mead Johnson’s parent company, Li Jie, are also trying to sell their infant nutrition business. However, “only a few private equity funds follow up the bidding”.

Before it was announced that the sale was suspended today, the “list of shortlisted bidders” of Miss Suu kyar surfaced. As introduced by xiaoshidai, in March this year, a consortium composed of baring Asia, JUNLEBAO and Sequoia China was shortlisted for the bid of Meisu Jiaer, and the industrial investors who entered the second round of bidding included Mengniu, JUNLEBAO and Aoyou.

A person close to this transaction told xiaoshidai that he believed that there were two main reasons for the stagnation of the current transaction. First, the milk powder industry is indeed facing challenges because the newborn birth rate is difficult to recover in the short term; Second, when industrial investors have no intention to buy, private investors have no synergy value, and it is difficult to reach the psychological price of the seller.


The last prominent acquisition in China’s milk powder industry can be traced back to 2021. Chunhua capital purchased Mead Johnson’s China business from Li Jieshi with us $2.2 billion.

“Financing is also a reason. Due to the sluggish environment of the milk powder industry, banks are very cautious in financing, and it is difficult for buyers to offer good prices.” In his opinion, the middle


From the perspective of fislan, the profit forecast should be adjusted according to the good operating performance in the first half of the year to see if the buyer is likely to raise its bid. However, he predicted that in general, it felt that fislan might still prefer to sell the brand of Massu Kerr.


Headquarters idea

Today, when accepting the inquiry about the progress of this transaction from the snack agent, a spokesman from the headquarters of fisland said: “our policy is not to comment on market rumors, which is exactly what I said to Bloomberg.”

Although the Philippine side does not comment on rumors, it is certain that,


Simahan pointed out that the milk powder business is important to the company, but it is also vulnerable. Facing the fierce competition of local brands and the decline of birth rate, fisland had to be cautious. “Therefore, in 2022, we announced the strategic evaluation of the brand of Massu Kerr, precisely to ensure the long-term development of the brand.”

As introduced by the snack agency, in December last year, fislan announced a strategic review of its infant nutrition business, aiming to seize the growth opportunity and ensure the success of its business. Pointed out that,


菲仕兰首席执行官司马翰

He also said, “this review phase will only focus on the brand and its organization. The spokesman also stressed that this review is applicable to the global business of the brand. In other words, the review will not be limited to the products of the brand in the Chinese market.

According to the data, massugar is one of the largest brands under fislan, and its infant formula milk powder is sold in 25 countries and regions such as Europe, the Middle East, Asia (including China) and Mexico.

Chen Ge, President of fislan China, once said to the snack generation, “the current business strategy and development of massucar will be promoted as planned,.

“Five five open”

那么,如果美素佳儿出售被按下“暂停键”,那么对其在华业务又会有什么影响呢?

Today, a senior person in the milk powder industry told the snack agency that the latest situation of the sale of Meisu Jiaer by fislan is not expected to have an impact on the development of the latter in the Chinese market. “For Miss Suu kyar, the top priority is to seek sustainable growth.”


As for the reason for the current “deadlock”, the person analyzed that it is likely that the current milk powder market environment is facing challenges.

He said that considering the high valuation of the business, if foreign milk powder is purchased, the problem of how to achieve sustained business growth in the Chinese market will still need to be solved in the future; For local milk powder brands, the development of domestic milk powder brands is no worse than that of foreign brands, and the overall capacity of the milk powder market also brings pressure to business growth. “(the above transaction) the possibility of final transaction is about 50% to 50%, depending on the change of the overall market environment and the maturity of the transaction conditions.” The above-mentioned person said that, at present, for the headquarters of fislan, the business of Mercure Kerr is at an ideal peak, “when the price is most affordable”, but unfortunately, the changes in the external market environment make it difficult to successfully conclude the transaction.

He also believes that whether fislan will insist on selling the business of Massey Kerr depends on the company’s global strategic needs and operating conditions. “From my personal judgment, they will wait for the right trading opportunity and choose an appropriate price to clinch a deal. Now it is actually immature, the buyer’s willingness is not strong, and the price naturally does not go up.” The source said.

Milk powder changes

Interestingly, like fislan, Li Jie, who was accused of selling the entire Mead Johnson milk powder business, also faced “cold” in the transaction. In April this year, Bloomberg quoted the news that Li Jie had started the sale process of the whole milk powder business, and it was expected that the sale would bring in $7billion to $10billion. At that time, some analysts thought that the valuation of $10billion “seemed too high”, including the growth of infant nutrition and the decline of profitability. A month later, Bloomberg quoted “people familiar with the situation” as saying that only a few private equity funds followed up the bidding. However, this time investors may not only hesitate about the performance prospects, but also a sudden “milk powder shortage” in the United States.

 

The snack maker said that due to the suspension of Abbott’s infant milk powder factory in Michigan due to the recall, and the tight supply chain due to the epidemic, the United States is experiencing a large-scale milk powder supply crisis. As the United States is the largest market for Li Jie, the continued infant formula crisis has “scared” potential “suitors. In addition, some private equity companies are waiting to see how the U.S. situation develops before deciding whether to continue to acquire the business. It can be expected that the pattern and competitive environment of the US milk powder market may change, bringing new changes to the milk powder industry, especially the global resource allocation of foreign brands and private investors.

Originally, infant milk powder in the United States was a highly concentrated and highly dependent industry on local production. According to the US FDA in early May, about 98% of US infant formula milk powder is produced locally. Market data show that Mead Johnson, Nestle Garbo and Perrigo nutrition under Abbott and Rexroth occupy nearly 90% of the infant formula market in the United States, of which Abbott has the highest market share.

 

Under the “milk powder shortage”, Nestle, Abbott and other players have accelerated production to make up for the gap, and the United States is ready to relax the restrictions on milk powder import, which will break the original market pattern: some old “players” may lose their share due to market liberalization, while some new “players” hope for a rare opportunity to enter the U.S. milk powder market. Earlier this month, Biden said at a virtual meeting with executives of several milk powder manufacturers that more companies need to enter the infant formula market in the United States.

According to incomplete statistics, so far, Danone, the Australian brand bubs and the parent company Jianhe of heshengyuan have all started to promote the delivery of milk powder to the United States. In addition, Fonterra and A2 milk also said that they had submitted an application to the FDA for the supply of baby food.

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