Mengniu Launches General Offer to Acquire All Outstanding Shares of Yashili
20 Jun 2013 --- China Mengniu Dairy Company Limited, and Yashili International Holdings Ltd, jointly announced that Mengniu will launch a general offer to acquire all of the outstanding shares of Yashili. As part of this transaction, Yashili’s controlling shareholders, Zhang International Investment Ltd. and CA Dairy Holdings, have irrevocably undertaken to accept the offer.
For each Yashili share, a Yashili shareholder will have a choice of either
accepting:
(a) HK$3.50 in cash; or
(b) HK$2.82 in cash and 0.681 share in a private company set up by
Mengniu for the sole purpose of holding shares in Yashili
The offer price of HK$3.50 per share represents a premium of approximately 9.4% over the closing price of HK$3.20 per share on the last trading date prior to the stock suspension on 13 June 2013. The SPV shares will be subject to a three year lock up period and attached certain repurchase option rights.
Mengniu intends to finance the entire total consideration from external financing. The general offer is subject to customary conditions and Mengniu's shareholders approval.
Following completion of the transaction, it is intended that Zhang International will retain 10% attributable interest in Yashili.
Ms. Sun Yiping, Chief Executive Officer of Mengniu said, “We are pleased to be the controlling shareholder of Yashili. This transaction will have an enormous strategic significance to the shareholders of both companies. With the huge room for growth in China’s pediatric milk formula market, the partnership with Yashili, one of the most successful milk powder brands in China, will greatly strengthen both companies' business platform to offer consumers with more choices in dairy products that are safe, healthy and of highest quality. It will generate important synergies for the development of the two companies, thereby capture the rapid growth of pediatric milk formula market in China.”
Ms. Sun added, “The Yashili team boasts extensive and proven management experience within the pediatric milk formula industry. We will maintain Yashili as an independent operating platform upon the completion of the offer. In the future, we will introduce expertise both from Mengniu and international partners to enable Yashili to develop into a more internationalised pediatric milk formula brand.”
Mr. Zhang Lidian, Chairman of Yashili and Director of Zhang International said, “Zhang International has committed to accept Mengniu’s offer. Zhang International is looking forward to working closely with the Mengniu team to create a leading platform for quality milk powder in China. Zhang International chooses to collaborate with Mengniu for two reasons. First, Mengniu has a leading position in the domestic dairy industry. Second, we appreciate the strategic platform provided by COFCO Group, which is a large-scale
state-owned enterprise. COFCO has an open management style, which encourages companies it acquired to maintain its management autonomy to grow bigger and stronger. We really anticipate and are confident about the cooperation.”
Eric Zhang, Managing Director of The Carlyle Group stated, "Carlyle has worked closely with Yashili’s management team in the past several years to facilitate the company’s internationalization, including setting up the Food Safety & Quality Assurance Committee and supply chain initiatives in New Zealand. We are pleased to see the company has developed steadily over the years.”
Established in 1998 and listed on the Hong Kong Stock Exchange in 2010, Yashili is currently one of the largest domestic pediatric milk formula producers and retailers in China, carrying the “Yashili” and “Scient” milk powder brands. Its comprehensive product lines address the health concerns of all age groups from infants to the elderly. In recent years, Yashili has increased its commitment to R&D in pediatric milk formula and sourced raw milk from overseas suppliers, mainly from New Zealand. It is estimated to invest RMB1.1 billion for the establishment of a manufacturing facility for production of
finished products and semi-finished products in New Zealand. In 2012, Yashili reported an income of RMB3,655 million and a net profit of RMB468 million.
UBS has been appointed as the lead financial advisor, and HSBC and Standard Chartered have been appointed as joint financial advisors, to Mengniu in respect of the contemplated transaction.
An application has each been made by Mengniu and Yashili to the Hong Kong Stock Exchange for the resumption of trading in the shares with effect from 9:30 AM on 19 June 2013.
