BEIJING, Jan. 6 (Xinhua) -- China Mengniu Dairy Co has offered to buy out China Modern Dairy Holdings for $826 million in a deal that will help it secure a stable supply of raw milk.
This follows China Mengniu's purchase of 965.47 million shares in Modern Dairy at HK$1.94 ($0.25) apiece, from a joint venture of KKR China Growth Fund and CDH Fund IV, which raised its stake in Modern Dairy to 39.9 percent from 25.4 percent previously. Under Hong Kong's corporate rules, the owner of more than a 30 percent stake in a company will have to make an offer to buy out the shares it does not already own.
China Mengniu said it will make an offer for the remaining China Modern Dairy shares at the same price of HK$1.94 each, a 7 percent premium to their Wednesday close. It expects to spend another HK$6.4 billion on that transaction, boosting its stake further to 91 percent.
Following the deal, Modern Dairy will remain listed in Hong Kong as some of its shareholders, including Chief Executive Lina Gao, said they would not sell their holdings, a filing showed.
China Mengniu said it would fund the purchase through internal resources and external debt.
The deal will enhance the business collaboration and will ensure the continuity of high quality and safe raw milk supply to Mengniu Group, the filing said.
Based in East China's Anhui Province, China Modern Dairy is the country's largest dairy farming company in terms of herd size and the largest raw milk producer. (Global Times)
A single purchase
