China Modern Farming Dairy Holdings Ltd.
(Modern Farming) is a dairy company founded in Ma'anshan City, Anhui Province,
China and is the holding company of Mengniu Group, which produces products such
as milk, yogurt, ice cream, powdered milk, and milk tablets. According to a
recent report, the enterprise Ai Yang Niu Technology, an entrepreneurial
project of former employees of Mengniu Group, will sell 75% of their stake to
Modern Farming. Ai Yang Niu Technology has been cooperating with Mengniu since
receiving a large investment from Mengniu in 2015. The announcement of the
acquisition was made on March 15, and the total amount of the acquisition is
RMB 288 million.
Ai Yang Niu Technology is mainly engaged in
animal husbandry e-commerce platforms, animal husbandry service cloud
platforms, operation of animal husbandry service industries, sales of feed,
additives and veterinary drugs and transaction consulting of agricultural and
livestock products in China.
On the announcement date, Mengniu Dairy
indirectly owned 73.66% of the target company Ai Yang Niu Technology and holds
a total of 1.65% of the shares of the buyer, Modern Farming and hence the
transfer of shares constitutes a connected transaction. After the transaction
is completed, Mengniu Dairy's shareholding in Ai Yang Niu Technology will be
reduced to 25%.
Ai Yang Niu Technology specializes in dairy industry e-commerce
From the investment in 2015 to the sale in
2022, Mengniu's investment in Ai Yang Niu Technology has led to RMB 187 million
in revenue. The target price of RMB 288 million is equivalent to 22 times the
price-earnings ratio, and the acquisition premium rate is 10 times.
According to publically released data, Ai Yang
Niu Technology has built a comprehensive e-commerce platform that integrates
functions such as buying and selling transactions, financing and payment,
logistics and distribution, and industrial re-education in the model of the
internet and dairy industry chain. The company's material distribution center
shortens the length of the supply chain for the ranches that engage in animal
husbandry.
Ai Yang Niu is the first platform in the
industry to realize online supply chain financing, and it is also the first
e-commerce platform to use blockchain financial services. Currently, the price-earnings
ratio of Mengniu and Modern Farming is 28.18 times and 7.6 times, and the
price-earnings ratio of e-commerce platform Alibaba is 28 times.
Acquisition of Ai Yang Niu Technology will give Modern Farming a
stronger place in the market
According to a Modern Farming representative,
by acquiring a majority stake in Ai Yang Niu Technology, Modern Farming can
make use of the resources available to Ai Yang Niu Technology, pay close
attention to the market trend of pasture materials, reduce its procurement
costs, and optimize its operation and management capabilities. Additionally,
Modern Farming will further leverage its industrial chain synergy advantages as
a leading dairy enterprise and provide upstream and downstream services such as
digital technology, supply chain finance, and breeding technology through an
ecological sharing platform to improve its profitability.
For more information, please check our Dairy Products
China News.
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