China Mengiu Dairy Company announced Monday that Cofco, a Hong Kong grain trader which is part of the mainland’s largest grain trader, and Hopu Investment Management will purchase a 20% share in Mengniu for US$790 million, Bloomberg reported. Mengniu was one of the firms implicated in the melamine-tainted milk scandal that rocked the Chinese dairy industry and led the central government to call for industry consolidation. Mengniu said the proceeds from the sale will be used to strengthen the firm’s financial structure and facilitate future growth and expansion. Cofco and Hopu also intend to take stakes in other mainland milk producers, including Jinniu Milk Industry, Yinniu Milk Industry, and Inner Mongolia Laoniu Community Welfare Development Association. Cofco hopes the acquisition will help diversify its existing food operations. For Hopu, the acquisition is part of a wider mainland investment strategy. After raising funds from Goldman Sachs and Singapore’s Temasek Holdings, Hopu bought a stake in Bank of China from the Royal Bank of Scotland.
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