China Mengniu to exit dairy products making unit for $586 million cash

HONG KONG (Reuters) - China Mengniu Dairy Co Ltd 2319.HK said late on Monday it would sell its 51% stake in dairy products making unit Shijiazhuang Junlebao Dairy Co Ltd for 4.01 billion yuan ($585.51 million) cash to strengthen its financial position.

The dairy group will sell the stake to Shijiazhuang Penghai Venture Capital Fund and corporate management firm Shijiazhuang Junqian Enterprises Management Corp Ltd as it focuses on its core businesses and expansion of premium dairy products.

China Mengniu, which expects to gain 3.43 billion yuan before taxation from the disposal, said the deal would strengthen its balance sheet and overall financial position, and proceeds would be used for general working capital and to facilitate future investment opportunities.

Reporting by Donny Kwok; Editing by Subhranshu Sahu