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Nestle sells Chinese business unit Yinlu

Nestle has agreed to sell its Yinlu peanut milk and canned rice porridge businesses in China to Food Wise Co, a company controlled by the family of Yinlu founder Chen Qingshui.

Nestle gave no financial terms for the deal, which it expected to close by the end of this year.

The Swiss multinational has been ditching underperforming units and had put its North American water business and Yinlu under a strategic review.

The deal covers all of Yinlu’s operations, including its five factories in Fujian, Anhui, Hubei, Shandong and Sichuan. Yinlu brands had sales of US$768 million last year.

The transaction lets Nestle focus on key categories in China: infant nutrition, confectionery, coffee, culinary, dairy and pet care, it said, adding it remained fully committed to the greater China region, its second-largest market with sales of nearly $7.7 billion last year.

As part of the transaction, Nestle will retain its ready-to-drink (RTD) Nescafe coffee business and distribute the products across most of the greater China region.

Yinlu will continue to manufacture the Nescafe RTD products for Nestle and distribute the products in several provinces. Yinlu will continue to manufacture and sell Nestea products under licence from Nestle.

Reporting by Michael Shields; Editing by Riham Alkousaa and Stephen Coates of Reuters.

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