China Modern Dairy to acquire controlling stake in China Shengmu

China Modern Dairy Holdings Ltd. (CMD) will acquire 107,200,000 China Shengmu Organic Milk Limited (CSM) shares from selling shareholders for HK$37,520,000, representing approximately 1.28% of CSM's total issued share capital. This transaction, alongside an irrevocable proxy for 2,086,942,512 CSM shares (24.90%) from Start Great, will result in CMD holding 30% or more of CSM.

Consequently, CMD will launch a mandatory conditional cash offer for all remaining CSM shares at HK$0.35 per share, valuing CSM at HK$2,933,453,330.2. The maximum consideration payable by CMD under the offer is HK$2,016,320,835.9, to be financed through internal resources. This acquisition is anticipated to enhance CMD's production mix, consolidate its leading market position, and strengthen its ESG profile.

Upon full acceptance of the offer, CMD will hold 70.01% of CSM's issued shares, leading to CSM being consolidated as a CMD subsidiary. This is expected to increase the Enlarged Group's total assets to RMB39,187.3m and net asset value by RMB1,905.6m as of June 30, 2025. The offer price represents a premium ranging from 7.75% to 14.75% over recent market prices, yet a discount of 31.68% to CSM's net asset value.