CHINA – Swiss food and beverage giant, Nestlé is planning to sell its Chinese unit Yinlu Foods Group and has hired US lender and financial services provider, JPMorgan Chase & Co. to handle the divestment, a recent Bloomberg report reveals.

Yinlu is widely known for its ready-made Chinese porridge and was acquired by Nestle in 2011. The business could be valued at US$1 billion, Bloomberg said n the report citing sources familiar with the subject-matter.

According to the report, Nestle is reaching out to potential buyers including Chinese food and beverage companies like Dali Foods Group Co., Hangzhou Wahaha Group Co. and Uni-President China Holdings.

The food and beverage firm is said to be planning to offload a majority stake in Yinlu and may retain a small holding to oversee the production of Nescafe ready-to-drink coffee, which Yinlu co-manufactures in China.

Nestlé currently plans to call for first-round bids as soon as late April or early May, However, the coronavirus outbreak has been potentially viewed as a factor that could delay the process.

When the Swiss food conglomerate acquired the Chinese unit in 2011, it sought to tap the burgeoning demand in China but has long been failing to feather a course in to profitabity despite a number of wake-up calls.

Since Mark Schneider took the helm in the company in 2017, he has significantly emphasized on trimming Nestlé’s portfolio, divesting assets such as a dermatology business and its U.S. ice-cream business.

Nestlé restructuring costs and other expenses tripled to US$2.8 billion last year, largely led by a write-down of Yinlu’s value.

However, Chief Financial Officer, Francois-Xavier Roger recently noted the Chinese company contributes to Nestlé’s leading position in ready-to-drink coffee in China.

Yinlu, which started its food business in 1985, specializes in the production and sale of canned foods and beverages.

The company has five production facilities in Xiamen, Shandong, Hubei, Anhui and Sichuan with an annual capacity of up to 6 million tons.