Chinese dairy maker Yashili International Holdings Ltd. (SEHK: 1230) is said to be acquired by China Mengniu Dairy Co., Ltd. (SEHK: 2319).
Sources said recently that it would be acquired by Mengniu and on June 13, the buyer and it each suspended trading on the Stock Exchange of Hong Kong in succession.
Wang Dingmian, a dairy expert, said in an interview that judging from the time they each suspended trading on the Hong Kong bourse yesterday, there would be great possibility for the report to be true. As one of the top two dairy makers in the Chinese mainland, Mengniu was poor in infant formula. And provided that it wanted to strengthen ability in the field, launching mergers and acquisitions (M&As) was a good choice. And the target might be Yashili. Launching M&As was an efficient way for a dairy maker to expand fast, but if it attached importance to only corporate size but not product quality, it would be laid behind by foreign rivals sooner or later.
People in the circle pointed out that this was not beyond market expectations as it distributed special dividends about a month ago. It said in the evening on May 5 that in order to thank support of shareholders, it decided to distribute special dividends to shareholders and the dividends was CNY 28.25 per share. It released financial results for the fiscal year 2012 on March 25 this year and on the day, it announced a dividend distribution of CNY 11.31. Zhang Lidian, founder and president of it, controlled an about 51.62 percent stake in it and from this, he gained about CNY 723 million. Carlyle Group, the second-biggest shareholder of it, got about CNY 337 million. Its cash and cash equivalents reached about CNY 2.07 billion as at the end of December 31, 2012.
Actually, this has been the third time for the market to have such report since September 2012. The Hong Kong media said last September that leading global infant formula makers including Mead Johnson and Abbott planned to fuel expansion in the Chinese mainland through launching M&As and Yashili was one of the targets. And on June 7 this year, a 100 percent stake in it was said to be put into pocket by Inner Mongolia Yili Industrial Group Co., Ltd. (SHSE: 600887), a domestic archrival of Mengniu, and after the deal, the top two shareholders of it would quit.
