China's confectionery company Hsu Fu Chi International Wednesday said the Chinese government has approved Nestle's proposed plan to gain a major stake in the company.

On completing an anti-monopoly review, the Ministry of Commerce has approved Nestle's US$1.7 billion investment in Taiwan-based Hsu Fu Chi for a 60 percent stake, Hsu Fu Chi said in its statement to the Singapore Stock Exchange. The Hsu family will hold the 40 percent.

Nestle plans to delist Hsu Fu Chi from the Singapore Exchange and will announce a specific date later, its statement added. Nestle, the maker of instant coffee, candy bars and ice cream, has been banking on acquisitions to increase its exposure in China under a strategy to lift revenue from emerging markets. Nestle CEO Paul Bulcke earlier said the company plans to get 45 percent of revenue from developing countries by 2020, up from a third now.

According to Euromonitor, Nestle takes 1.9 percent share of China's candy and chocolate segment in 2009, lagging the 4.2 percent for Hsu Fu Chi and 15.5 percent for Mars Inc.

Based in Dongguan in southern Guangdong Province Hsu Fu Chi, which has a market capitalization of about US$2.6 billion, makes wide range of Chinese snacks such as peanut candies. The company has four plants in China with a strong distribution network in first-tier cities and rural areas.

Last year, Hsu Fu Chi boosted its revenue by 14 percent to 4.3 billion yuan (US$678 million) while its net profit grew 31 percent to 602 million yuan.

In a separate statement yesterday, Nestle said it will halt retail sales and close an ice cream factory in Shanghai by the end of this month.