(Yicai Global) May 24 -- A well-known Chinese infant milk powder producer is set to take over leading Australian dairy company, Australian Dairy Park Pty Ltd (ADP). One aim of the move is to acquire more brand resources before China's government introduces new measures to regulate the infant milk powder industry next year, insiders told Yicai Global.
Ausnutria Dairy Corp. [HKG:1717] will acquire all businesses belonging to the leading Australian dairy company ADP for CNY120 million (USD17.4 million) via its Australian subsidiary, Ausnutria said yesterday. Ausnutria will also spend CNY60 million for a 50 percent stake in Australian milk powder brand Oz Farm Royal Pty Ltd.
Ausnutria's latest acquisition is part of its go-global strategy and also a response to China's new regulatory measures for its milk powder industry, dairy expert Song Liang told Yicai Global. Acquiring an additional plant implies more quota for formula registration, which can help companies retain more product brands and seize more market opportunities after the government introduces new policy on Jan. 1, 2018.
Starting from January 2018, infant-formula sellers in China must register their product formula with the government. In addition, per rules on infant formula registration, one certificate for milk powder production can correspond to up to three formula brands. Therefore, the number of such certificates owned by a dairy company is directly linked with the number of brands it can have in the market.
ADP is one of the eight infant formula makers already registered with China's Certification and Accreditation Administration (CAA).
The purchase price is not cheap, Song believes. However, it is still a good deal since ADP has been awarded an infant formula production certificate by the CAA and is thus eligible to register its formula, while the acquisition will help fix Ausnutria's shortcomings.