China Modern Dairy denies Mengniu takeover talks
Earlier today, Bloomberg reported that COFCO Corp and KKR – the largest shareholders of Mengniu and China Modern Dairy respectively – had conducted talks regarding the potential acquisition of China Modern Dairy Holdings by Mengniu.
State-owned COFCO, which is China’s biggest food and beverage manufacturer, holds a 20% interest in Mengniu. While New York-based KKR owns 24% of China Modern Dairy.
Hong Kong-based China Modern Dairy has moved to quash the rumours - posting an announcement on the Hong Kong Stock Exchange website denying that any negotiations with Mengniu had taken place.
China Modern Dairy published the statement at the request of the Hong Kong Stock Exchange following an increase in the company’s share price and trading volumes.
The price of China Modern Dairy shares has increased by more than 10% following initial reports of acquisition talks.
“The board of directors (the ‘Board) of China Modern Dairy Holdings Ltd. (the ‘Company’) noted the increase in the price and volume of the shares of the Company this morning,” said the China Modern Dairy announcement. “The Board wishes to state that the Company is not aware of any reason for such increase.”
“The Board wishes to confirm that there are no negotiations or agreements relating to intended acquisitions or realizations which are discloseable under Rule 13.23 of the Listing Rules, neither is the Board aware of any matter discloseable under the general obligations imposed by Rule 13.09 of the Listing Rules, which is or may be of a price sensitive nature.”
DairyReporter.com approached Mengniu concerning the takeover rumours, and pressed the firm on whether discussions had taken place between COFCO and KKR.
“The company has no comment to make on the issue,” a Mengniu spokesperson. “Mengniu does not represent COFCO Corp or KKR, so we cannot comment on this,” the spokesperson added.
Enhancement of Milk Sources
While it declined to comment on earlier reports, Mengniu cryptically referred DairyReporter.com to an extract of its 2011 annual report – a section titled “Enhancement of Milk Sources.”
“To enhance the quality of milk sources at its supply sources, increasing the proportion of milk sources provided by ranches and scaled farms to the Group’s milk sources has always been one of the focuses of Mengniu,” said the extract.
DairyReporter.com contacted COFCO and KKR but nobody was available.