China Mengniu Dairy struck its third major deal in two months yesterday, paving the way for the company, the country's largest dairy producer by sales volume, to expand into the baby formula segment.
Mengniu, with products ranging from milk to yogurt and ice cream, is buying a 75.3 per cent stake in the Hong Kong-listed formula maker Yashili International from chairman Zhang Lidian's family and American private equity firm Carlyle, a filing with the Hong Kong stock exchange said.
The vendors can sell their shares for HK$3.50 each in cash, about 9.4 per cent higher than the closing price last Thursday, or opt for a combination of cash and shares. Shares of Mengniu and Yashili resume trading today.
David Chin, head of Asia investment banking at UBS, Mengniu's lead adviser, said the firms' distribution channels do not overlap, and Mengniu hopes eventually to supply its raw milk to Yashili, which currently gets all its raw milk from New Zealand.
Mengniu said it plans to introduce expertise to develop Yashili into an international brand of paediatric milk powder.
Chin declined to provide details of Mengniu's financing plan, but he did not rule out the possibility of further fund-raising in the capital market.
