April 22, 2020

Meiji acquires stake in Japfa's dairy firm

Meiji, Japan's dairy giant, has agreed to acquire a 25% stake in Japfa's dairy company, AustAsia Investment Holdings, in a US$254.4-million deal that aims to expand its presence in China's dairy sector.

This follows its establishment of Meiji Dairies last year.

Meiji said, "In China we are engaged in the milk and yoghurt business, ice cream business and confectionery business, and the businesses are steadily expanding. In particular, the market for chilled milk has been growing significantly mainly in East China due to consumers' preference of the taste of chilled milk and health consciousness."

The company added, that in response to the rapid growth of demand for its products, it will expand production capacity of the existing Meiji dairies milk and yoghurt factory in Suzhou from 2021, as well as build another site in Tianjin in H2 2022.

Singapore-based Japfa said it will continue to own a 75% stake in AustAsia Investment Holdings and will continue to manage the subsidiary's farming operations in China, where it claims to be one of the leading producers of premium raw milk.

As at the end of last year, AustAsia owned about 80,000 head of cattle, five modern dairy farms in Dongying and Shandong, as well as two farms in Chifeng in Inner Mongolia.

The deal is expected to be completed by July 2020.