China’s biggest dairy producer Yili Industrial Group Co has shown its ambition to consolidate its position and expand its production line with its latest overseas acquisition plans. Yili announced on Wednesday [10 May 2017] night that it will bid for a 100 percent stake in leading US organic yogurt brand Stonyfield, which is currently owned by French dairy giant Danone. The acquisition will total $850 million, according to Yili…Full Article: China Daily May 2017

Key Points

  • Yili Group will likely face competition to acquire Stonyfield from PepsiCo and Coca-Cola.
  • In 2014, France’s Danone acquired USA’s Stonyfield Farm (producer of yogurts, smoothies, milk and cream).

ChinaAg Comments

  • In May 2017, Inner Mongolia Yili Group (SHA:600887) gave up on its plan to acquire a 37% stake in in China Shengmu Organic Milk (HKG:1432) after Yili failed to get the approval of the Ministry of Commerce by an April 21st deadline.
  • In November 2016, Yili Group announced a profit increase (20.69% year-on-year)during the first three quarters (January to September) of 2016. Yili Group attributed part of its profit increase to sales of its Ambrosial high-end yogurt (Greek yogurt product).
  • In October 2016, Yili Group announced it would issue a CNY 9 billion [~US$1.3 billion] private placement of new shares to be raised by Hohhot City Asset Investment, Inner Mongolia Transportation Investment, Jinshi Haorui Investment [Qingdao based private equity firm], Ping An Asset Management [Hong Kong based insurance company], and Jinmeihua Investment. Of the CNY 9 billion, CNY 4.6 billion [~680 million] would be used to acquire a 37% stake in China Shengmu Organic Milk (HKG:1432).
  • In September 2016, Sunshine Insurance Group increased its stake in Yili Group. As a result, Inner Mongolia’s largest shareholders included Hohhot Investment (8.8%), Hong Kong Securities Clearing (6.22%), and Sunshine Insurance Group (5%).
  • In 2015, Inner Mongolia Yili Group was ranked China’s top consumer brand, and was followed by Master Kong (see Tingyi Cayman Islands), Mengniu and Want Want China. In the same year, Mengniu Dairy had a 37% share of China’s high-end milk market, followed by Yili Group (26.6%) and Shengmu (7.6%).
  • Inner Mongolia Yili Group (SHA:600887) traces its roots back to 1956 when it operated as a dairy cooperative in Hohhot, Inner Mongolia Region. In 1993, the company was restructured as Yili Group and began its ice cream operations. Currently, Yili produces milk, milk beverages, sorbet, ice cream, milk powder, milk tea powder, yoghurt, and cheese. Since 2005, the company has been China’s top supplier of milk powder and milk tea powder.
  • Founded in 2009 and headquartered in Bayannur, Inner Mongolia Region, China Shengmu Organic Milk (HKG:1432) is China’s largest organic milk producer and had an estimated 54% market share (organic milk) in 2013.
  • Founded in 1988 and headquartered in Hong Kong, Ping An Insurance (HKG:2318) &  (SHA:601318) is a financial services company whose products include exchange-traded funds (ETF), life insurance, and other banking/investment services.

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