Yili milks success with bid for rival

China’s largest diary producer Yili Group is planning to buy a stake in a Hong Kong-listed rival for around $680 million, doubling down on a high-growth sector that has been beset by multiple scandals.

Yili Group turned to equity investors for a private placement over the weekend, giving it more than enough firepower to buy a 37% stake in Shengmu Organic Milk, enough to trigger a mandatory general offer according to Hong Kong rules. The deal was well-received by investors, sending Yili’s stock 10% higher on its Monday open.

That came as little surprise to analysts covering the stock, who said that despite a series of scandals in China’s dairy sector the deal had obvious benefits for both companies.

“We believe this alliance is a win-win for both, as Yili will secure quality raw milk while Shengmu will benefit from...

¬ Haymarket Media Limited. All rights reserved.

FinanceAsia has updated its subscription model.

Registered readers now have the opportunity to read 5 articles from our award-winning website for free.

To obtain unlimited access to our award-winning exclusive news and analysis, we offer subscription packages, including single user, team (2-10 users), or office-wide licences.

To help you and your colleagues access our proprietary content, please contact us at subscriptions@financeasia.com, or +(852) 2122 5222

Article limit is reached.

Hello! You have used up all of your free articles on FinanceAsia.

To obtain unlimited access to our award-winning exclusive news and analysis, we offer subscription packages, including single user, team (2-10 users), or office-wide licences. To help you and your colleagues access our proprietary content, please contact us at subscriptions@financeasia.com, or +(852) 2122 5222