November 23, 2010
Mengniu to buy 51% stake in Junlebao Dairy
Inner Mongolia Mengniu Dairy will spend RMB469.2 million (US$70.6 million) to acquire a 51% equity stake in Junlebao Dairy, according to reports.
After the acquisition, Mengniu Dairy will be the biggest shareholder of the Shijiazhuang-based Junlebao Dairy, while Junlebao will still sell under its own brand.
According to Mengniu Dairy's annual report, the company recorded a revenue compound growth rate of 27.3% between 2006 and 2009. It also saw revenue grow 30.3% on-year in the first half of 2010.
Junlebao Dairy owns the largest yogurt production base in north China, with nine member companies spanning Hebei, Jiangsu, Heilongjiang and Shaanxi. It is the No.4 yogurt brand in China's market.
After that acquisition, Mengniu Dairy will have over 30% market share in the yogurt industry.
Meanwhile, Mengniu's cooperation with Modern Farming Group helps it form a nationwide layout of mik source. Based in Anhui, Modern Farming is the country's largest dairy husbandry company and raw milk provider. Its sales to Mengniu Dairy Group made up 98.9% and 99.6% of the company's total revenues in 2008 and 2009, respectively.
Currently Mengniu Dairy Group takes a 2.32% stake in the raw milk supplier.
