Nestlé agreed in July to buy a 60-percent stake in Singapore-listed Hsu Fu Chi for 1.4 billion francs ($1.7 billion) to boost the group’s footprint in China.
The Chinese commerce ministry this week approved the deal, which Euromonitor analysts say will make Nestlé the second largest confectionery player in China by retail sales after Mars, the companies said in separate statements.
It is the latest successful foreign takeover of a major Chinese brand after the commerce ministry last month approved the buy-out of Chinese hot pot chain Little Sheep by US fast-food giants KFC and Pizza Hut.
But Beijing has also blocked foreign takeover deals.
In 2009, it vetoed a $2.4 billion bid by Coca-Cola to take over beverage
maker Huiyuan Juice Group, saying the deal would have led to higher prices and
a smaller choice of products.
Analysts have suggested the government uses its tough anti-monopoly laws to prevent foreign firms getting a major stake in key sectors of the economy.
China’s anti-monopoly law requires firms to receive government approval before they can merge if their combined global revenue exceeds 10 billion yuan ($1.55 billion) or if their revenue in China tops two billion yuan.
Authorities also review deals if two or more of the firms have each reported more than 400 million yuan of revenue in China in the previous fiscal year.
Nestlé (China) Ltd spokeswoman Nancy He said the deal “demonstrates Nestlé’s long-term commitment to China and enhances our ability to grow our portfolio of international and local brands in this dynamic market.”