Chinese milk processer China Mengniu Dairy Co Ltd has made an offer of HK$1.94 (€0.23) per share to take control of China’s largest dairy farming company to help secure a stable supply of milk.

The offer follows China Mengniu’s deal to buy 39.9% of the shares in China Modern Dairy Holdings Ltd from a joint venture of KKR China Growth Fund LP and CDH Fund IV LP which increased its share from 25.4%.

China Mengniu estimates that it will spend an additional HK$6.4bn (€768m) buying the remaining shares. The company must make an offer to buy the remaining shares under Hong Kong’s corporate rules.

Following the announcement, shares in China Modern Dairy surged by almost 10% to HK$1.98, but shares in China Mengniu fell by over 2%.

China Modern Dairy Holdings was one of the first dairy companies in China to adopt large-scale free-stall dairy farms. It has the largest output of milk and the highest number of dairy cows in China.

The group had 24 farms in operation and one under construction, with 197,833 cows in June last year, as well as 16,166 cows in two joint ventures.

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