KKR milks Mengniu’s fear of food safety scares

The private equity firm’s sale of its China Modern Dairy stake is nicely timed as it raises funds. But for buyer Mengnui the deal poses considerable integration risk.

China Mengniu Dairy is on a mission to clean up its safety record after a series of food scandals. So when a chance came along to raise its stake in a key milk supplier, it wasn’t going to say no.

Mengniu has offered to buy another 16.7% stake in China Modern Dairy from private equity firm KKR for about $242 million, triggering a wider offer to all shareholders that values the entire group at around $1.6 billion. 

Modern Dairy is China’s the largest dairy farming company in terms of herd size as well as the largest raw milk producer in China. The company, which is headquartered...

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