KUALA LUMPUR (Oct 9): Nestle (Malaysia) Bhd said it is disposing of its chilled dairy and manufacturing businesses to French dairy group Lactalis for a cash consideration of RM155.3 million.

In a statement today, Nestle said its subsidiaries Nestlé Products Sdn Bhd (NPSB) and Nestlé Manufacturing (Malaysia) Sdn Bhd (NMSB) have entered into a business transfer agreement to sell and transfer the two businesses as a going concern to Lactalis Trading Malaysia Sdn Bhd and Lactalis Manufacturing Malaysia Sdn Bhd.

It said revenue contributed by the chilled dairy business for the last three financial years from 2015 to 2017 have been RM114.9 million, RM116.94 million and RM106.06 million respectively.

Nestle said the sale of NPSB will include the distribution, marketing, promotion and sale of chilled dairy products in Malaysia, Singapore and Brunei.

The disposal of NMSB will include the manufacturing of chilled dairy products and cold sauces, and packing of milk powder at the Petaling Jaya factory.

It said the disposal will have a positive one-time effect on the net assets and net profit of Nestle.

"After deduction of all the disposal related expenses, we expect a one-time gain of approximately RM27 million split over the years 2018 and 2019. This represents one-time earnings per share of approximately 11 sen.

"The gearing ratio will be impacted positively because a part of the sales proceeds will be utilised to reduce the bank borrowings and intercompany debts," it said.

It said subject to the fulfilment of conditions, the sale and transfer of the chilled dairy business is expected to be effected on Jan 1, 2019, while the sale and transfer of the manufacturing business is expected to take effect on July 1, 2019.

Moving forward, Nestle said it will use the proceeds from the disposal of RM100 million to establish a Milo Manufacturing Centre of Excellence in its Chembong factory in Negeri Sembilan, while the balance shall be used to reduce bank borrowings.

Trading in Nestle shares is currently suspended till 5pm today in relation to the announcement.