North China’s Yili Industrial Group Co Ltd said it plans to acquire a stake of no more than 51 percent in Pakistani dairy maker Fauji Foods Ltd, according to a statement released on Tuesday [31 July 2018]. The Inner Mongolia autonomous region-based dairy group has handed in a letter of investment intention to acquire Fauji Foods, a sub-affiliate of Fauji Fertilizer Bin Qasim Ltd, as it looks to acquire new assets to consolidate its global position…Full Article: China Daily Aug 2018

Key Point

  • Founded in 1966 and headquartered in Lahore, Pakistan, Fauji Foods (formerly Noon Pakistan) produces a wide variety of dairy products including UHT milk, pasteurized milk, butter, cheese, as well as fruit juices.

ChinaAg Comments

  • In October 2017, according to Euromonitor International, Inner Mongolia Yili Group (SHA:600887) and China Mengniu Dairy (HKG:2319) have a combined 44% share of China’s dairy market. Shanghai’s Bright Food Group had a 4.8% market share.
  • In May 2017, Mengniu Dairy announced it would issue ~USD 194.8 million worth of exchangeable bonds that could be exchanged for Modern Dairy shares. According to the Hong Kong Stock Exchange, if all the bonds are exchanged for the Modern Dairy shares (Hong Kong listed), it would represent 11.24% of Modern Dairy’s issued capital. During the same month, Yili Group attempted to acquire Stonyfield (US yogurt producer) from France’s Danone for approximately USD 850 million. Danone ended up selling Stonyfield to their compatriots Lactalis (French dairy company).
  • 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 January 2013, Inner Mongolia Yili Group announced it would in establish an infant formula factory in South Canterbury, New Zealand (South Island), as part of its acquisition of Oceania Dairy. The factory began operation in 2014. As of 2015, the majority of its infant formula products were shipped to mainland China.
  • In December 2012, Inner Mongolia Yili Group announced it would acquire New Zealand’s Oceania Dairy.
  • 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.

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