Nestle International Mergers And Acquisitions Management Essay

nest dissemblenational coalitions And Acquisitions Management Essay come on is one of the largest Nutrition, health and wellness company and committed to provide the best Nutritional nutriment and products somewhat the Globe. Company was founded in 1866 by Henri Nestl in VeVey (Switzerland). come near is a flat organisation with few levels of management and get across of c whole over. merely, currently company is operating in 84 unalike countries with 456 factories. Furthermore, In order to pick up the company long term sustainable growth and rectify understand of customers needs, Company constantly reviews its product portfolio and foc delectations on its efforts to conduct research. Consequencely, success of cuddle is a reflection of clear de attractive responsibilities, reflection of professionalism, responsible post of management, well defined objective as well as meaning(a) global leadership position (www.nestle.com) approach Brands(www.nestle.com)The Nestl brand portfolio such as take out and dairy products, nutritions, weight management, performance and healthcare, breakfast cereals, ice cream, coffee and culinary products (prepared dishes, cooking aids, sauces) pet care, bottled water etc. practically cover all nutrient and beverage categories. Many of the brands have leadership with in the local and global market and existed for several years, for guinea pig S.Pellegrino the mineral water from Italy, and Nestl Moa in Brazil, are over 100 years old. The best-known global brands include Nescaf, Nestea, Maggi, Buitoni, Purina and Nestl itself. Furthermore other brands for instance Milo, Nespresso, Nesquik, Kit Kat, Smarties, Polo, Friskies, Perrier and Vittel sells in many countries. It is considered that number go of brands including local and international reaches into the several thousands.NESTLE INTERNATIONAL MERGERS AND ACQUISITIONS.Key Dates1866 Company Founded1905 Nestle Merger with Anglo-Swiss Condensed Milk Company1929 Nestle Merger with Peter, Cailler, and Kohler Chocolates Suisses S.A.1947 Nestle Merger with Alimentana S.A. (Maggi)1971 Nestle Merge with Merger with Ursina-Franck1974LOral (equity interest)1977 Nestle originate Alcon (2002 partial IPO)1985 Nestle Acquire Carnation1988 Nestle Acquire Buitoni-Perugina1988 Nestle Acquire Rowntree1992 Nestle Acquire Perrier1998 Nestle Acquire San Pellegrino and Spillers Pet foods2000 Nestle Acquire Power Bar2001 Nestle Acquire Ralston Purina2002 Nestle Acquire Schller and Chef America2003 Nestle Acquire of Mvenpick, Powwow and Dreyers2004 Nestle Acquire Valio (ice cream)2005 Nestle Acquire Wagner, Protika, Musashi2007 Novartis Medical Nutrition, Gerber and Henniez2009 Vitality drinkable occupancy2010 Nestle Acquire Kraft Pizza pronounce VENTURESKey Dates1974 LOral1981 Galderma (joint venture with LOral)1990 Nestle Joint Venture with widely distributed Mills (Cereal Partners world wide)1991 Nestle Joint Venture with Coca Cola (formerly CCNR) Beverage Partners Worldwide2002 Nestle Joint Venture with Fonterra (Dairy Partners Americas)Competitiveness (www.nestle.com)Nestle, competitive advantages among the competitors are based on four points,For instance, Nestle product and brand portfolio such as Nestle Group is the manufacturer of billions of different products and operates in thousands of mensurate added brand around the world.Furthermore, Nestle unmatched Geographically presence, for instance Nestle overtake approx CHF 35 billions in emerging market in every year which is higher than a average growth and profitability,Moreover, Nestle leading RD capabilities, for Instance Company spend approx CHF 2.0 billions on RD for innovations and renovation to increased awareness in local taste and preference.In addition, company international personal credit line strategy such as to admiration and follows all applicable local, laws, legislation, religious practices and culture aspect.International Business StrategyNestls internation al traffic strategies are associated with direct foreign investment in food or other dairy lineage.For instance, operating in the advanced market, Nestl policy is to invest direct with the big companies to achieve the economical scale, or, establish strategical alliance with large companies and sights the new markets for business growth. Moreover in less developed market Nestle grow by processing technology or employ the local brand or acquire the local company.For its significant growth in future, Nestle is actively focused on the Developing and emergent Market (DE) for instance India and China. It is considered that the populations of DE economies will increase by 3300 one thousand one thousand thousand by the end of 2050. The Sales in DE economies market is accounted CHF 35,000 millions in percentage 30% of the total sale which has been increased 15.4% over 2007 and company expects to double in the neighboring ten yearsNestl Corporate organisationThe company governance bod ies are advance of Directors ( instrument panel) chairman and Corporate Governance Committee (CCGC)Compensation Committee (CC) nominating speech committee (NC)Audit Committee (AC)Chairman of the BoardChief executive directors Officer (CEO)Executive Board (EB)Board of Directors (Board)According to the company Article of Associations 2009 Article 14 15, Number of Directors and term of office, The Board of Directors shall consist of at least seven peniss similarly board shall be elected for three years by the General Meeting. Furthermore each year board will renew by gyration and will establish new order of rotation in the case of increase or decrease of board of director.The board Members areChairman 2 Voice ChairmenChief Executive police officer (CEO)Members of the CommitteeRole of the Board and its CommitteesAccording to the company Article of Associations 2009 (NO 16), board is responsible for the selection of chairman and enunciate Chairmen, and its assignment of responsibi lities. Furthermore According to the company Article of Associations 2009 (No17 18), article defines the general proponent of board such as board can conduct business to the extent that is not within the board regulation or general meeting. Moreover board is responsible for,For instance,Management and supervision of the businessThe appointment and removal of the chairman and Voice chairmenThe appointment and removal of committee membersThe appointment of CEO and members of Executive board (EU)Preparation of Management report also preparation of General Meetings including agenda and proposal.The company long term StrategyFinancial operationEstablish or close branch officeThe Chairman and Corporate Governance Committee (CCGC)This committee consists of Chairmen, Two phonate chairmen, Chief executive officer and elected member of the board. Furthermore, committee liaises between board and chairman. The board approved power and duties for (CCGC) and particularly (CCGC) acts as a cons oler and solve the management issue between chairman and chief executive officer.The Compensation Committee (CC)The Compensation committee is consists of tokenish cardinal non executive members of the board and chief executive officer furthermore CC recommends compensation policy to the board and also proposes the remuneration system and principals for approvals.The Nomination Committee (NC)The Nomination committee is consists of independent and non executive members of the board preferably not the member of (CCGC) committee, furthermore this committee establish principal to select scene for board of director also prepare proposal for board decision.The Audit Committee (AC)The Audit committee is consists of minimum two non executive members of the board and voice chairmen who control the committee, furthermore majority of the members are independent and at least one member have financial expertise. Moreover the responsibly of AC is to assists the Board to fulfill its responsibili ties with respect to financial and method of accounting reporting process also overview of risk management as well as privileged and external take stock process also unrestricted approach to the companys record .Chairman of the BoardThe chairman is responsible to supervise the board (subject to the power of board) and management of the company governance. Chairman responsibilities are,For instanceLeads the BoardOverall responsibilities for the development of strategies (together with CEO)Appointment and removal of proposal tradeholder and executive managementTo ensure the alignment of boards strategies and board committeeTo ensure the proper flow of informationIn coordination with CEO, Responsible to organise and chair the board meetingResponsible to organise and chair the General Meeting give-up the ghost close to nomination committee (assessment of board of director nomination)Takes a leading role to design the group corporate governanceThe Chief executive officerThe chief exe cutive officer is considered the supreme executive authority for the company and the Groups (subject to the power reserved to the board) the committee and the chairman, furthermore, CEO has following duties and powers,For instanceOrganise, manage and monitoring device the business affairsTo approve, acquisitions, participations, investment and divestituresIn coordination with chairman, submit proposal to the board for the nomination or dismissalTo call and chair the meetings of Executive board topic to chairmanThe vice ChairmenThe board shall appoint two independent directors as vice chairmen, responsibilities of vice chairmen are to work close to the chairmen and discuss industrial, strategic marketing, privileged control as well as financial issue. Furthermore, one of them should be have financial expertise to ensure the good versed financial control and second should have industrial experience on the global levelCode of Business ConductThe Nestl Code of Business Conduct are k nowing to provide a frame of reference against all possible situations that may occur and helps the continued implementation of the Corporate Business Principles Moreover the purpose of the encrypt is to employees should seek guidance when they are in doubt situation, and bar all those conduct which may damage Nestle reputation. The main points of code of business conduct,For instanceCompliance with laws, rules and regulationsConflicts of InterestOutside directorships and other outside activitiesFamilies and RelativesCorporate opportunitiesInsider tradingAntitrust and fair dealingConfidential informationFraud, protection of company assets, accountingBribery and corruptionGifts, meals, entertainmentDiscrimination and harassmentFailure to complyReporting illegal or non-compliant conductSTRATEGIC APPROCHES FOR REDUCE POLITICAL, OPERATIONAL AND administrative VULNERABILITIESCorporate Business Principles (International)Nestle business objective is to market and manufacture the products such a way to create long term value for business partner, coverholders, consumers, and employees, and also to ensure the highest standard of organisation.Moreover nestle is committed to create the value for all those communities around the world where Nestle market there products. Nestle corporate business principles are based on, for instance, fairness, honesty and sound human values such as, consumer communication principal, human right principal, child labor and environs protection principal, and translated into 40 different languages Therefore, company respect and follows all applicable local, laws and legislation, religious practices and culture aspect.In additions, Nestl Management is committed to follow the Business Principles to avoid the administrative and operational Vulnerabilities therefore management is responsible for,For instance,Manage professional skills,Curiosity and open-mindednessHigh level of interest in other cultures,Commitment to incessant learning, impr oving, and sharing knowledgeMotivate staff in order to contribute wider group performanceInvolvement of each employee at all levels (concerned with continuously adding value to company).Consequencely, success of Nestle is a reflection of clear defines responsibilities, reflection of professionalism, responsible attitude of management, well defined objective as well as significant global leadership position.Company Performance (www.nestle.com)15-Apr-2010 Strong support for Board proposals at Nestl AGMMar-2010 Nestl Bets on Mexican Coffee02-Mar-2010 Nestl completes acquisition of Kraft Foods frozen pizza pie business05-Jan-2010 Nestl to acquire Kraft Foods frozen pizza business05-Jan-2010 Nestl opens global RD Centre04-Jan-2010 Nestl to sell remaining Alcon shares to Novartis.Annual General MeetingOn 15-April-2010 The Nestle Annual General Meeting was held in VeVey (Switzerland), the main points of the meeting for instance, the meeting has approved the annual reports and re-elected t he Peter Brabeck-Letmathe (chairman), for three year, also other board member such as Steven G. Hoch (Founder and senior partner) and Andr Kudelski (Chairman and CEO Kudelski group) and two new board members, Ms Titia de Lange and Mr. Jean-Pierre Roth selected for three years. Furthermore 2,640 shareholders have approved the proposal for increase the dividend to CHF 1.60 per share. Moreover chairman has point out the issue regarding deforestation of rainforest to shareholders and explained Nestle is working towards to the end of deforestation of rainforest.Acquisition of Kraft Foods frozen pizza businessOn 05-January 2010 Nestle has showed the interest to acquire the Kraft food frozen business in the USA and Canadian market with including brands are such as California Pizza, DiGiorno, Tombstone, Jacks and Delissio for USD 3.7 billion in property. Furthermore it is considered that USA is the largest pizza market in the world and it generate about USD 37 billion, therefore capital of Minnesota Bulcke, CEO of Nestl said,This acquisition will bring the selection of great US and Canadian brands and also it will enhances Nestls frozen food activities in sexual union America where Nestl only had a minor presence until now.In addition, this acquisition will provide a strong strategic pillar in the US and Canadian Market where company already established a leadership in dishes and hand held products, such as Lean Cuisine, Buitoni, Lean Pockets, Stouffers and Hot Pockets.Consequently, on 01 March 2010 after completion of closing conditions Nestl has concluded the acquisition of Kraft Foods frozen pizza.Nestl Bets on Mexican CoffeeNestl has announced the plans to invest US$ 390 million in Mexican production and infrastructure facilities. The investment will be directed Nescafe instant coffee processing plant to expand the capacity by 40%, which will make it the worlds largest coffee processing plant. Due to the low production cost and vast network of trade, Nestle is p lanning to build Mexico as a regional export hub in the American zone.Nestl opens global RD CentreOn 05-Jan-2010 Nestl has open a Global RD center in Santiago de Chile. The rising RD Center will include the bioactive ingredients to reduce the sugar and fat level in the biscuits without compromising the biscuit quality.Sell of remaining Alcon shares to NovartisOn 04 Jan 2010 Nestl S.A. has transferred the Alcon remaining 156,076,263 shares representing around 52% of the companys issued and outstanding share to Novartis, accordance with the contract agreed on 6 April 2008. Moreover, the lawsuit for transfer the control are gradually based on three issues for instance,The divestment of Alcon,The initial IPO of 23.25% in 2002The sale of 24.8% in 2008And the exercise of the call option by Novartis. Alcon was acquired by Nestl in 1977 for USD 280 millionNestle share buy tolerate Programme.Nestle boards of Directors Continues to believe that significant share buy back Programme should h elp to drive the performance of food and beverage business and enhance the shareholder value,Therefore Nestle Board has announced share buy back Programme on 15 August 2007 for over the next three year subject to market conditions. The objective of this Programme was to improve capital efficiency and future prospects of food and beverage business. The Programme has been divided into two steps such as one of CHF 15 billion and one of CHF 10 billion.Furthermore, callable to acquisition of Novartis medical nutrition and Gerber, which has created a critical bulk in Nutrition sales approx CHF 10 Billion? On the contrary the total value of repurchased share from August 2007 to December 2009 is CHF20.1As a consequence, in 2009 the group has brought back CHF 7 billion which is equal worth of its own shares and the remaining CHF 5 billion in share will be brought back in the course of 2010. After completation of this Programme further group will launch a new CHF 10 billon share back Progra mme with cloaked to buy additional CHF 5 billion share before the end of the year.NOTABLE FACTSThe worlds largest food and beverage company has been internationally criticized for purchasing and using the medallion oil, water bottling issue in USA, child labor problems in cocoa-growing nations and its aggressive marketing of baby food product all over the world.Greenpeace Campaign. (www.greenpeace.org.uk)Greenpeace organisation has started a campaign against Nestle over its purchase of palm oil by an Indonesian company called Sinar Mas.Greenpeace claims that Sinar Mas getting the palm oil by destroying the rainforest and use in it for candy bars and other products. Considerably, rainforests contributes about 20% of greenhouses gases also support transport sector. Therefore, deforestation of rainforests and the excessive use of bio-fuels are serious environmental issues on the global level.Bottle Water issue (Steel, Emily. 2010, Journal)Nestle is a top water bottling company and se lling water under 70 different brands name in the world. Nestle controlled one third bottled water market in America. However, Oregon Department of Fish and Wildlife (ODFW) and coalition of many others environmental and fond justice organizations has launched a campaign against Nestle in North America to prevent the new bottle water facility in Cascade Locks Oregon. The reason for this campaign is bottled water facility would lead to the commodification of Oregons and it contributes to the plastic waste problem also it is the waste of prime resources and potential way to destroy the local wildlife. screw up Milk Scandal (www.baby drawaction.org)Nestle has been targeted and criticized by the International baby food action network (IBFAN) for the violation of international code of marketing of breast milk substitutes and also aggressive baby food marketing strategies for selling artificial infant feeding which has the cause of unnecessary death of children.SWOT ANALYSIS (2010. DATAMO NITOR)Nestle is the world largest company by sales and strong brand portfolio with manufacturing and marketing the branded food product around the world.Strengths-Strong brand nameAccording to the Inter brand management company, Nestl is one of the best-known companies in the world and ranked 63rd best global brands in 2008 and its top 30 brands earn over CHF 1,000 million which is 70% of its sales. Furthermore,For instanceCustomise products to the local market conditionsStrong global operationsRD CapabilitiesWeaknesses-Increasing product recalls historyIn November 2008, Nestl USA recalled the product called Nesquik Strawberry Powder, due to the fearing of small fragments of aluminum.Furthermore, Nestl Prepared Foods Co has recalled 900,000 pounds worth of meals the Lean Cuisine brand frozen chicken due to small chunks of blue plastic.Moreover in family 2008, in Hong Kong Company recalled UHT milk due to contain melamine chemical.OpportunitiesThe Nestle is utilising the RD capabilit ies to achieve the competitiveness in the health and wellness market. For instance, Nestl is focusing on nutrition combining taste to reduce the fatty acids, salt and sugar and increase the micro nutrients such as minerals and vitamin for consumer better health and to ensure for the profitable growth.Furthermore, Nestle is working on,Scientific innovations to address obesity and diabetesOn developing economiesFocus on external MarketCurrently company generate 50% of food and beverage in North America, India, China, Russia, Brazil and company is expected double of the sale in next ten years.Threats-IssuesThe company has been internationally criticized for issues and fines for instance obtain and use of palm oilWater bottling issue in USA,Child labor problems (in cocoa-growing nations)Aggressive marketing of baby food product all over the world-FinesIn February 2009 Nestle and Coca Cola Company has been fine in US$ 650,000 against Enviga-Brand green tea beverage products.In February 2 010 Nestle has been fine E30 million by Greeces competition watchdog for abusing against its dominant position in the coffee market.-Political and Economical FactorNestle company is operating in 84 countries in the world with having entire different cultural, political and economical back ground. The concerning issues regarding these countries are, the political stability, the infra structure, the local regulation, the foreign trade which might be potentially affect on Nestle ability to do business with in these countries.Nestle Group sales, profitability and financial position (http//www.nestle.com)Nestl Groups sale in 2009 was in at CHF 107.6 billion, with organic growth of 4.1%. Operating profit was in at CHF15.7 billion, and net profit was CHF10.43 billion with organic growth of 4.1 percent. Underlying earnings per share rose from CHF 2.82 to CHF 3.09, which is equal to 9.6% , Food and Beverages sales was in CHF 99.8 billion, with organic growth of 3.9%,, Marketing and administr ative expenses rose 33.7% of total sales. Nestle Expand RD capabilities in 10 basis points in developing countries. Reported EBIT margin was 30 basis or 14.6%, with an EBIT of CHF 15.7 billion. The Groups operating cash flow reached by 10.7billion or 67 %, the groups reelect on invested capital (ROIC) increased 15.6% (including goodwill) and 35.1% (excluding goodwill) and net debt reached CHF 18.1 billion.In 2009 consolidatedIn millions of CHFAs % of Total SaleSale107,618Net profit (b)10,4289.7%Operating cash flow17,934Capital Expenditure4,6414.3%Market capitalisation174,294Net Debit18,085EBIT (A) Group15,69914.6%Free cash flow (c)12,369EBIT (a) Food Beverage13,08313.1%Equity ascribable to shareholders of the parent48,915Ratio of the debt to equity (gearing) 37.0%Over all cost of goods sold decreased by 110 basis pointsDistribution costs fell by 40 basis pointsMarketing and expenses rose by 110 basis points (equal 33.7% of total sale) order Americas Total Sales was CHF 23.4 billi on, with 6.4% organic growth and 2.3% real internal growth. In North America, internal growth accelerated in the, ice cream, pet care, soluble coffee and chocolate in the and slow down in frozen food, Moreover Brazil build the confident(p) momentum and mainly to growth in dairy category also rest of the region has showed the positive improvement in the third quarter.Zone Europe Total Sales was CHF 16.5 billion, with 0% organic and -1.5% real internal growth, France, Switzerland, Germany, Italy and the Iberian region has rise internal growth. The Great Britain region delivered the strong performance, Eastern Europe presented a weaker real internal growth in Czech and Slovak Republics and Russia, positive in e Poland and the UkraineZone Africa, Asia and Oceania Total Sales was CHF 11.7 billion with 3.0 real internal growth and 5.8% organic growth the organic growth was unchanged in Oceania and Japan and the rest of all emerging regions were improved in volumes, although real internal growth in Oceania and Japan was unchanged. Furthermore, China, Philippines, South Asia and Africa has shows the strong real internal growth.AppendicesAppendix No 1Appendix 3 Sale forecast Sale and EBIT Margin by operating segmentsSales and EBIT Margin by Products.