Mengniu takes control of China's fourth largest yoghurt maker Junlebao

China Mengniu Dairy Company Ltd, the country's largest dairy company by market value, announced Monday that it will invest 469.2 million yuan ($70.66 million) to purchase 51 percent stakes from Junlebao Dairy Co., Ltd.- owner of the largest yoghurt production base in North China -becoming the largest shareholder of the latter.

After the deal, the management team of Junlebao will be maintained, and its brand is to be operated separately. Also, the market share of Mengniu and its subsidiaries in the yoghurt market will be increased to more than 30 percent.

Yang Wenjun, Mengniu's president, said the company aims at snatching a position among the world's 10 largest dairy giants and expects its annual revenue to reach 50 billion yuan ($7.53 billion), and Junlebao's to double to 3 billion ($451.82 million), and to 4 billion yuan ($602.43 million) in the next five years.

Industry analysts say that the two sides are complimentary in products research and development; creating technologies and quality control.

As early as 2009, Chineseauthorities issued policies to encourage dairy companies to integrate resources via ways including mergers and acquisitions, assets restructuring, Analysts say that the integration of resources is a trend and mergers are an effective way.

Source: Global Times