China’s biggest milk company Mengnui Dairy says its takeover of Yashili International will not affect the progress of Yashili’s plans for a $230 million infant milk formula plant at Pokeno in the north Waikato.
The two companies announced the NZ$2 billion deal last week and Mengniu chief executive Sun Yiping today confirmed it would not change the Pokeno plan, which has New Zealand Overseas Investment Office consent and is currently seeking land use and emission consents from local councils.
In a statement, Sun said the deal, which will marry China’s biggest liquid milk producer and seller with Yashili, one of China’s top three producers of infant formula for the domestic market, would have «enormous» strategic significance to the shareholders of both companies.
Yashili’s Zhang family owners will retain a 10 per cent interest in Yashili.
Sun said there was «huge» room for growth in China’s paediatric milk formula market, and the partnership with Yashili, would strengthen both companies’ business platform to offer consumers more choices of dairy products that were safe, healthy and high quality.
The statement said it was estimated the company would invest NZ$230m in plant construction in New Zealand.
The deal marked the latest step in China’s milk industry to consolidate the market after several tainted milk scandals tainted the sector.
Yashili had formed a subsidiary, Yashili New Zealand Dairy to buy land for the Pokeno plant, which would create jobs for around 120.
For Mengniu, which also recently announced an investment in French dairy group Danone, the deal with Yashili will strengthen its foothold in the milk powder sector, which previously contributed less than 2 per cent of its revenues.
China’s infant milk formula market is expected to grow to US$25 billion by 2017, according to Euromonitor data, as more mothers join the workforce.
Source: Stuff
