Top domestic Infant Formula player to buy over milk supplier for US$387 million

China Feihe, China’s country’s largest infant formula producer has offered US$387 million to acquire its largest milk supplier YuanShengTai Dairy Farm. This followed similar upstream purchases by its rivals.
Feihe went public in November 2019 and successfully raised US$856 million thereby leaving it with much cash capital to invest.
In recent years, Chinese dairy companies have been increasingly looking to secure their supply of raw milk via big stock purchases. China Mengniu Dairy hiked its stake in China Modern Dairy Holdings to become the latter’s controlling shareholder in 2017 and did the same to China Shengmu Organic Milk last July. Meanwhile, Yili Industrial Group has taken control of Saikexing Reproductive Biotechnology Group and announced in August this year that it will become China ZhongDi Dairy Holdings’s 2nd largest shareholder.
For China Feihe, securing milk supply is crucial as any disruptions could delay production and reduce sales. Its largest supplier, YuanShengTai has provided China Feihe with more than 80% of its fresh milk over the past 4 years.