* Yashili leaps as much as 23 pct as shares resume trading
* Temasek, Hopu and three private investors buy stake from
* Stake sale helps Yashili meet Hong Kong free float rules
* YuanShengTai Dairy launches up to $500 mln IPO-IFR
(Adds comments, YuanShengTai Dairy IPO details)
By Elzio Barreto
HONG KONG, Nov 11 A group of investors led by
Singapore's Temasek Holdings bought a $213 million stake in
Yashili International Holdings Ltd, sending shares of the milk
powder producer soaring after its parent sold down stock to meet
Hong Kong listing requirements.
The deal took place as China Mengniu Dairy Co Ltd was forced
to reduce its stake after it failed to buy enough shares of
Yashili to force a delisting of the company.
The Yashili stake sale adds to a slew of mergers,
acquisitions and equity market deals in Greater China as
companies look to raise funds for expansion to cope with booming
demand for everything from raw milk and infant formula to
yoghurt and other dairy products.
"The government is trying to push forward industry
consolidation, that's why we're seeing more acquisitions in this
area," said Jacqueline Ko, an analyst at Kim Eng Securities in
"There are lots of positive actions from the government. In
three to five years, we're talking about two-thirds of the
companies involved in the industry will be gone, so that will
benefit the bigger players."
Shares of dairy companies have jumped in anticipation of
consolidation in the sector and stronger domestic demand in
China, where sales of dairy products are expected to nearly
double from 2012 to 2017 to about $89 billion, according to
estimates by business consulting firm Frost & Sullivan.
China Huishan Dairy raised $1.2 billion in an
initial public offering in September, with its shares up nearly
15 percent since the listing.
YuanShengTai Dairy Farm, China's fourth-largest producer of
raw milk, on Monday launched an up to $500 million IPO in Hong
Kong, Thomson Reuters publication IFR reported.
Singapore state investor Temasek, through one of
its Mauritius subsidiaries, China-focused private equity firm
Hopu and three individual investors agreed to buy 471.13 million
shares of Yashili from its parent China Mengniu Dairy Co Ltd for
HK$3.50 each, putting the total deal at HK$1.65 billion ($213
million), the dairy companies said in a securities filing.
Yashili gained 17 percent to HK$4.25 in
mid-afternoon trade in Hong Kong, and hit a record high of
HK$4.45 as it resumed trading after a nearly three-month halt.
China Mengniu climbed 3.4 percent, compared with a 1.3
percent gain for the benchmark Hang Seng index.
Temasek bought 47 percent of the Yashili shares, with Hopu
taking 38 percent. The three individual investors bought the
remaining 15 percent through British Virgin Islands holding
companies, according to the filing, which did not name them.
Mengniu offered $1.6 billion in June for all of Yashili, but
it received offers for 89.82 percent of Yashili's stock. That
fell just short of a 90 percent threshold that would have
enabled Mengniu to make a "compulsory acquisition" of the
remaining shares and delist Yashili from the exchange.
The takeover got commitments from Yashili's two largest
shareholders, the Zhang family and private equity firm Carlyle
Group, which owned a combined 75 percent stake in the
infant formula maker.
After the buyout offer closed in early August, Mengniu had
to sell down its stake in Yashili to ensure the still-listed
company met Hong Kong's public float requirements.
Yashili shares had been suspended since Aug. 14 after the
company applied for a three-month waiver to comply with the
minimum public float of 23.42 percent in its case.
($1 = 7.7516 Hong Kong dollars)
(Additional reporting by Fiona Lau and Ken Wang of IFR; Editing
by Stephen Coates)