HONG KONG--(BUSINESS WIRE)--China Mengniu Dairy Company Limited. (“Mengniu”, HK: 2319), and China Modern Dairy Holdings Ltd. (“Modern Dairy”, HK: 1117) today announced that Mengniu has increased its shareholding in Modern Dairy from 1% to 28% to become the single largest shareholder, through acquiring stake from Advanced Dairy Company Ltd. and Crystal Dairy Holdings Ltd., controlled by private equity investors KKR and CDH, respectively.
Mengniu is a leading branded consumer dairy product manufacturer in China with a strong commitment to providing high quality dairy products to Chinese consumers. Ensuring reliable raw milk supply and improving raw milk quality have been the key focus for Mengniu over recent years.
Modern Dairy, headquartered in China’s eastern province of An’hui, is a pioneer in bringing international best practices to dairy farming in China. Modern Dairy was founded in 2005 with a vision to create a professionally managed, large-scale dairy farming company that would meet the public’s demand for safe and high-quality milk.
Ms. Sun Yiping, CEO of Mengniu, stated, “The increase of Mengniu’s stake in Modern Dairy is to secure both quality and quantity of raw milk sources, as well as to further capitalize on our competitive edge in high-end milk source. Meanwhile, accelerating and expanding investments in quality farms will allow Mengniu to establish a safer and more stable value chain in the dairy sector, to provide healthier and better quality dairy products to consumers.”
China’s dairy farming industry is still overall fragmented and under-developed, but leading players like Modern Dairy which follows international best practices with strict controls through the entire manufacturing process helps enhance food safety of dairy products for consumers in China. Modern Dairy is currently the largest raw milk supplier to Mengniu, operating 22 large –scale dairy farms across China with a geographic footprint that coincides with Mengniu’s processing facilities.
“Modern Dairy under the leadership of the current management team grew the business successfully over the last few years to become an industry leader in China’s dairy farming sector,” said Mr. Julian Juul Wolhardt, Member of KKR. “We believe the management is capable of seizing market opportunities and continuing company’s growth.”
In 2012, KKR’s partnership with Modern Dairy was recognized with the PEI Asia Operational Excellence Award in the Manufacturing & Industrial category, for providing Modern Dairy with essential operational support and working side-by-side with its management team to identify and implement operational efficiencies and productivity improvements.
“KKR provided us with operational value-add and management expertise, which helped fuel Modern Dairy's growth. KKR has been a good partner since they made the investment.” Said Ms. Gao Lina, CEO of Modern Dairy, “Mengniu and Modern Dairy have a history of long-term and close cooperation. We believe Mengniu’s investment will bring more growth opportunities to Modern Dairy, creating a win-win situation. The company will continue as it has in the past to continuously improve and deliver value to its shareholders by supplying high quality milk to its customers.”
Advanced Dairy Company Ltd. and Crystal Dairy Holdings Ltd. have been shareholders of Modern Dairy since 2008, and will remain minority shareholders of Modern Dairy post Mengniu’s investment.
About China Mengniu Dairy Company Limited
China Mengniu Dairy Company Limited and its subsidiaries manufacture and distribute quality dairy products in China. It is one of the leading dairy product manufacturers in China, with MENGNIU as its core brand. The Group’s diversified products range includes liquid milk products, such as UHT milk, milk beverages and yogurt, ice cream and other dairy products such as milk powder. Mengniu’s liquid milk products ranked first, in terms of sales volume and sales value, among similar products in China in 2012, according to China Industrial Information Issuing Centre.
About China Modern Dairy Holdings Limited
Headquartered in China’s eastern province of Anhui, Modern Dairy’s primary business is raising dairy cows and selling raw milk to branded dairy companies for processing into consumer dairy products. Modern Dairy was founded in 2005 and built its first farm in 2006. Today, Modern Dairy is the largest dairy farming company in China, operating 22 dairy farms in Anhui, Heilongjiang, Hebei, Shandong, Shaanxi, Sichuan, Inner Mongolia, and Hubei provinces with total production capacity of over 700,000 tons of raw milk per year.