Mengniu Dairy and Yashili have made a joint announcement that Mengniu Dairy issued a tender offer to all shareholders of Yashili and that Chang International Inc., the controlling shareholder, and CA Dairy Holdings, the second largest shareholder, made the irrevocable commitment of acceptance to selling 75.3% stock equity.
This is the largest acquisition in China’s dairy industry, sending a message that Mengniu Dairy is strengthening expansion. Resources, products, brands, channels and others would be integrated to speed up the upgrade of the high-end milk powder sector.
China’s milk powder market still has great potential. Yashili is one of the most successful brands in China. It has rich management experience in infant milk powder. This acquisition is expected to bring synergy. On the other hand, Yashili’s operating platform will be retained as it was so that it can still be specialized in milk powder business. Mengniu Dairy and its international partners will introduce their expertise to Yashili to make it better.
The two largest shareholders of Yashili accepted the tender offer from Mengniu Dairy because Mengniu Dairy was the market leader and COFCO Corporation offered a strategic platform which was significant to its growth.
This tender offer is Mengniu Dairy’s fourth big move in market integration this year. It also has strategic cooperation with Arla Foods and Danone, covering the upstream, quality control and technology management.
