New | Yili in US$850m bid to buy US yoghurt producer Stonyfield
The Inner Mongolia-based company is “a front runner” in the bidding as Beijing encourages domestic firms to go global on a buying spree.
Inner Mongolia Yili Industrial Group, China’s biggest dairy company, is competing to buy Stonyfield, the largest American producer of organic yoghurt, in its first overseas acquisition to expand the range of its dairy products.
Yili is vying with Dean Foods Co. of Texas in buying Stonyfield in a deal estimated at US$850 million, although the Chinese company is considered the front runner because it’s offering a more favourable pricing, according to people familiar with the matter. Yili said in a stock exchange filing the bidding process is in its preliminary stages.
If Yili prevails in the acquisition, the company will own control of a yoghurt producer whose 2016 revenue topped US$370 million. The Chinese company may want to introduce the Stonyfield brand to China to give it an edge against its competitors in a market where consumers place a premium on celebrated Western labels, analysts said.
“Yili was previously known to be very cautious in making deals, but this time it is getting serious about that,”said Shen Meng, an executive director with boutique investment bank Chanson & Co.
Hit hard by a 2008 scandal whereby hundreds of babies were sickened by melamine-tainted milk, Chinese dairy companies including Yili and China Mengniu Dairy had been buying overseas dairy farms and producers to improve the quality of their own products and restore consumer confidence.
“The Chinese government is now encouraging so-called national champions like Yili to go on a global buying spree,”said Song Liang, an independent dairy analyst.
