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Strategies & Market Trends : Speculating in Takeover Targets
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To: richardred who wrote (2858)10/19/2011 2:45:34 AM
From: richardred   of 6850
Nestle eyes investments in Russia and M&A

Nestle cereal boxes are pictured through a logo in the company supermarket at the Nestle headquarters in Vevey, February 17, 2011.

Credit: Reuters/Valentin Flauraud

By Maria Kiselyova

TIMASHEVSK, Russia | Tue Oct 18, 2011 3:01pm EDT

TIMASHEVSK, Russia (Reuters) - Nestle ( NESN.VX), the world's biggest food group, is looking globally for bolt-on acquisitions and is stepping up investment in Russia in its hunt for growth, its chief executive said on Tuesday.

Nestle is aiming for Russia to become its biggest European market by sales, the company said, without giving a time frame.

Russia is already a significant market for Nestle, where it sells Nescafe coffee, grocery products and pet food.

"We are interested in acquisitions that make strategic, business, commercial and cultural sense," Paul Bulcke told Reuters in an interview at the opening of the second stage of a coffee producing plant in the Krasnodar region in south Russia.

However Bulcke also said he expected global raw coffee prices to stay "quite high."

"Raw material prices went up quite dramatically last year. I do believe that raw material prices are going to stay quite high, higher than they were two or four years ago," he said.

Bulcke said he sees growth opportunities across many markets.

"We are focusing on all categories where we are present, we are not going for one that is easier or where there is less competition, so we really want to grow our presence through different categories," he said in an interview.

Nestle has been linked to a potential acquisition of Russian baby-food and juice producer Progress as well as to a bid for Pfizer's ( PFE.N) Wyeth baby formula business if it comes up for sale and the larger Mead Johnson Nutrition ( MJN.N).

Bulcke declined to comment on specific targets.

Global consumer companies are showing increasing interest in the Russian market, as demonstrated by Unilever's recent purchase of Kalina, Russia's biggest cosmetics group.

"We feel very welcome in so many markets, emerging markets that are opening themselves up for foreign investment and creating the environment. But we are also growing in Western Europe," he said.


Nestle has been an active player in recent emerging markets M&A activity, taking stakes in two Chinese food companies.

The company has dry powder for acquisitions after selling its remaining stake in eyecare group Alcon to Novartis ( NOVN.VX), and has refrained from announcing a new share buyback program.

"There are so many opportunities everywhere -- food is something that is part of everybody's life, and that is our job," he added.

Nestle has invested more than 7 billion roubles ($226.4 million) in the coffee plant in Timashevsk, which it opened in 2005.

The plant now produces nearly all of Nestle's coffee in Russia and has become its biggest soluble coffee factory in Europe, the company has said.

It also supplies coffee to neighboring countries. Investment in the plant has brought Nestle's overall Russian investments to over $1 billion over the past decade.

"We have 12 factories here and the nature of the country -- with 140 million plus population -- allows us to aim for making Russia one of the biggest markets in Europe (for Nestle), so that means that we are going to have to invest more here," Bulcke said.

"It is clear that this has to be stepped up."

He said he was keen to look for stable investment opportunities given the current economic volatility.
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