Bright Dairy said in July 2010 it would pay NZ$82 million ($68 million) for a 51 percent stake in Christchurch-based milk processor Synlait. Bright Dairy didn’t specify in yesterday’s statement to the Shanghai Stock Exchange the amount Synlait was looking to raise in the IPO.
Chinese dairy companies including China Mengniu Dairy Co. (2319) have been seeking acquisitions to improve the quality of their supply chain amid safety concerns. Food-safety scandals in China ranging from toxic melamine in milk powder to kitchen waste reprocessed into cooking oil and rat meat being sold as mutton has driven consumers to buy products overseas.
Bright Dairy fell as much as 3.4 percent to 14.35 yuan in Shanghai trading today, headed for the lowest level since May 2. The stock has gained 47 percent this year, against a 1.9 percent decline in the benchmark Shanghai Stock Exchange Composite Index.
Synlait, which started operations in 2000 and processes more than 500 million liters of milk each year, posted a $6.3 million profit after tax for the year ending 31 July 2012, the company said on its website.
The New Zealand milk processor had the intention of listing within three to five years of the completion of the deal, according to yesterday’s stock exchange statement, citing a company announcement from July 2010.
Mengniu, the country’s largest dairy producer, said on May 8 that it had agreed to buy 26.9 percent of milk supplier China Modern Dairy Holdings Ltd. (1117) for HK$3.18 billion ($410 million) to gain greater control of milk supplies amid food safety concerns in the country.
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