Leading Dairy Yili Doubles Stake in Smaller Rival

What’s new: Inner Mongolia Yili Industrial Group Co. Ltd., one of China’s largest dairies, will pay HK$1.66 billion ($214 million) for shares of China Zhongdi Dairy Holdings Co. Ltd., becoming the biggest shareholder of its smaller peer.

The deal will see an Yili unit pay HK$1.132 per share, a 11% premium above its price at market close on Sept. 25. On completion, Yili’s 16.6% stake in the company will rise to 31.87%.

Background: Zhongdi Dairy is mainly engaged in the operation of dairy farms, including raising and breeding cows, producing and selling raw milk, and importing and selling cows.

The company recorded 23.74% growth in revenue to 873 million yuan ($127 million) due to strong demand for raw milk in the first half-year, whereas its profit jumped 109.51% to 105 million yuan.

The move marks the latest consolidation in China’s dairy industry, which is rapidly being controlled by names like Yili and Feihe.

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Related: Dairy Giant Feihe Guzzles Down One of Its Top Suppliers

Contact editor Yang Ge (geyang@caixin.com)

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