Chinese dairy giant Yili moves into Pakistan to escape ghost of milk scandals in home market
The country’s milk firms are still struggling in the aftermath of the melamine contamination scandal of 2008 which killed at least six children
China’s biggest maker of dairy products, Yili Group, said it plans to take a majority stake in Fauji Foods, a unit of a Pakistani fertiliser manufacturer, in a bid to expand its overseas presence.
In a company filing on Tuesday, the Shanghai-listed company said it has submitted a letter of intent to acquire a 51 per cent stake in Fauji Foods, which is engaged in the processing and marketing of dairy products, juices and jams in Pakistan.
It did not disclose any financial details about the potential deal, and neither company immediately responded to requests for comment.
Yili said it has assigned Citibank N.A. Pakistan to submit the letter to both the dairy maker and the South Asian country’s securities regulators. Both Fauji Foods and its parent, Fauji Fertilizer Bin Qasim (FFBL), are listed on the local bourse, and the deal pends approval from shareholders and board members at both Yili and the two Pakistani companies, as well as the authorities of both countries.
“There is still huge uncertainty on whether the deal could be closed,” Yili said in the filing.
The largest dairy producer in Asia and the eighth largest in the world, state-owned Yili started off as a small dairy-product processing factory in Inner Mongolia in 1993.
