China Feihe buys dairy farm for $3b

Chinese milk formula maker China Feihe (6186) will take over YuanShengTai Dairy Farm (1431) in a HK$3.07 billion deal and intends to keep the raw milk producer listed on the local bourse.

Feihe will pay HK$0.63 per share, representing a premium of 1.6 percent over YST Dairy's closing price last Thursday. Trading of YST Dairy resumes today after being suspended last Friday. Feihe said it will finance the consideration through its internal resources.

YST Dairy is one of China's largest fresh milk suppliers. It has geographical advantages as its farms are close to Feihe's downstream processing plants and Feihe will secure stable supplies through the acquisition.

YST Dairy reported a profit of 223.08 million yuan (HK$252.72 million) in 2019, compared to a loss of 556.31 million a year earlier.