China Mengniu Dairy is considering a bid for Pfizer's infant nutrition business, which is about twice the size of the mainland's biggest dairy firm.
The Financial Times reported on Sunday that the dairy company was in talks with the bank UBS to bid for the American health-care giant's US$10 billion nutrition unit, the owner of popular infant formula brand Wyeth.
Mengniu shares fell 5.92 per cent yesterday morning before closing at HK$25.75, down 1.72 per cent on the day, against the Hang Seng Index's 4.14 per cent gain.
Mengniu filed a statement to Hong Kong stock exchange yesterday, saying the company 'is not in any direct negotiation with Pfizer, and currently has no concrete arrangement or plan in connection with the bid'.
Yet it also said Pfizer's disposal of its infant nutrition business would capture the attention of the dairy industry and Mengniu would 'closely monitor the development'.
Analysts said it would be hard for Mengniu, with a market capitalisation of about HK$44 billion, to win the deal considering its relatively small size.
Several other global dairy giants including Danone, Nestle, Mead Johnson Nutrition, HJ Heinz and Abbott Laboratories are also potential buyers, according to the Financial Times.
