Retailing, Franchising, and Consumerism Business Intelligence in China

China's Mengniu Acquires 51% Stake In Junlebao For CNY470 Million

Chinese dairy giant Mengniu has announced that it has acquired a 51% stake in Junlebao, its competitor in the North China market, for CNY469.2 million.

This acquisition is expected to expand Mengniu's yogurt production capacity.

Junlebao's overall equity value is estimated at CNY920 million. Under the agreement, Mengniu acquires a 51% stake in Junlebao for CNY469.2 million. However, Junlebao will maintain its executive team and its Junlebao brand will still be operated independently after the acquisition.

With the cooperation, Mengniu's market share in China's yogurt sector will increase to 30%. According to statistics published by Mengniu, from 2006 to 2009, its yogurt compound growth rate was 27.3%; and its growth rate for the first half of 2010 increased by 30.3% year-on-year.

Yang Wenjun, president of Mengniu, said during a press conference that over the next five years, Mengniu aims to become the world's top ten dairy enterprise with annual revenue of CNY50 billion. Meanwhile, Junlebao's revenue goal will be doubled to between CNY3 billion and CNY4 billion.

Founded in 1995, Junlebao has developed into the largest yogurt manufacturing base in North China and it has annual revenue of CNY1.26 billion, of which 84% was contributed by yogurt products. The company has eight plants across China, including four in Hebei, one in Jiangsu, two in Heilongjiang, and one in Shaanxi. Its main products are yogurt and lactic acid bacteria beverages.

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