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Mengniu to buy majority stake in Junlebao

11-25-2010 09:03 BJT

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China's largest dairy company, Mengniu is making a game changing move by acquiring a smaller rival. A 470 billion yuan investment in exchange for 51 percent of the company.

By combining product research and marketing resources with Junlebao, Mengniu expects to enter the ranks of the world's top 10 dairy companies and achieve 50 billion yuan in turnover within the next five years.

Industry experts say mergers and acquisitions in China's dairy industry are the most effective means to enhance its competitiveness.

China's largest dairy company, Mengniu is making a game changing move by
acquiring a smaller rival.

Song Kungang, Chairman of China Diary Industry Assoc. said "China's diary industry has seen rapid development in recent years. Too much production exists in the industry. So it should now turn its focus on improving quality. The integration will promote the efficiency of current production and lead a new trend."

Mengniu ranks 16th on the list of the world's top 20 diary companies. Its revenue was nearly 26 billion yuan in 2009.

Many investors are doubting Mengniu's latest move. They're concerned the purchase could be too large to digest.

But others say - fear not. There's rarely a inedible product in China's diary market. And when it comes to yogurt in particular, appetites are seemingly insatiable.

One consumer said "We drink yogurt everyday. It could help the old to soften blood vessels and digesting food."

One consumer said "It's delicious and good for our skin."

China's yogurt consumption has blossomed in recent years. Huge market demand has also attracted an increasing number of foreign diary giants.

Experts believe M&As such as the one between Mengniu and Junlebao will increase the competitiveness of Chinese companies both at home and abroad.

Editor:Xiong Qu |Source: CNTV.CN

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