[ET Net News Agency, 26 November 2019] China Mengniu Dairy (02319) announced to acquire
100% of "Lion-Dairy & Drinks Pty Ltd", an indirect Australian unit of Kirin Holdings, for
A$600m, or HK$3.2bn.
By producing the group's increasing ultra-heat treatment (UHT) milk products in target
group's manufacturing facilities in Australia, Mengniu could capture the profit margin
previously reaped by third-party services providers, J.P. Morgan said.
The research house believes the acquisition further opens-up potential raw milk and
other ingredient sourcing opportunities which will bring about additional synergies within
the group.
From a supply chain perspective, the collaboration between target group, Burra Foods and
Bellamy's will potentially generate even greater synergies while providing better products
to consumers across the Asia-Pacific region.
JPM maintained its Overweight rating on Mengniu, with a price target of HK$38. (KL)