Yili Group turned to equity investors for a private placement over the weekend, giving it more than enough firepower to buy a 37% stake in Shengmu Organic Milk, enough to trigger a mandatory general offer according to Hong Kong rules. The deal was well-received by investors, sending Yili’s stock 10% higher on its Monday open.
That came as little surprise to analysts covering the stock, who said that despite a series of scandals in China’s dairy sector the deal had obvious benefits for both companies.
“We believe this alliance is a win-win for both, as Yili will secure quality raw milk while Shengmu will benefit from...
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