Sullivan & Cromwell is acting for Chinese dairy products maker China Mengniu Dairy Co. Ltd. on its proposed acquisition of infant formula company Yashili International Holdings for $1.7 billion.
Hong Kong partner Kay Ian Ng and Beijing partner Gwen Wong led Sullivan & Cromwell’s team on the deal. The firm also advised on a loan arrangement to finance the acquisition. Ng previously advised the underwriters in China Mengniu’s 2004 Hong Kong initial public offering.
China Mengniu has agreed to buy the stakes in Yashili held by the Carlyle Group and Zhang International Investment Ltd. Zhang, which is owned by Yashili chairman Zhang Lidian, holds a 52 percent stake in Hong Kong-listed Yashili while Carlyle’s interest is 24 percent. China Mengniu has also extended an offer to acquire all outstanding Yashili stock and take the company private.
Linklaters acted for Yashili, as well as Carlyle and Zhang.
China’s largest dairy, China Mengniu is 19 percent-owned by Chinese state-owned agricultural and food industry supplier China National Cereals, Oils and Foodstuffs Corp. In 2008, China Mengniu was among those Chinese companies whose milk products, including infant formula, were found to contain melamine.
According to Bloomberg, China Mengniu is seeking to acquire Yashili in part to improve its reputation since the melamine scandal, which led to death of six infants. Yashili sources all of its milk from New Zealand is building a plant there.