Leading international law firm Clifford Chance has advised Arla Foods amba (Arla) on an agreement to purchase an indirect stake of approximately 6% in Hong Kong listed China Mengniu Dairy Company Limited (Mengniu) for approximately US$290 million, making Arla the second largest strategic shareholder in Mengniu after China National Cereals, Oils and Foodstuffs Corporation (COFCO), and the transaction the largest international cooperation in China’s dairy industry to date.
In addition, Arla has entered into strategic cooperation agreements with Mengniu for Mengniu to be its exclusive strategic partner for Arla in China, and Arla to be the exclusive source of supply of various consumer products to be imported by Mengniu into China and various other selected countries. Arla will also provide technical, management, marketing and innovation advice to Mengniu in these countries. The parties have also agreed to cooperate in sourcing of ingredients for consumer products from each other and in investments, co-investing or the pursuit of business opportunities in the dairy sector in Europe and China.
Arla has also entered into a shareholders’ agreement and strategic coordination agreement with COFCO to coordinate on the development of Mengniu’s dairy business in China.
The agreements were signed during the recent visit of China’s President Hu Jintao to Denmark.
Stephen Harder, the Clifford Chance partner leading the team advising Arla, said: “We continue to see a tremendous amount of interest in China inbound investment, particularly in the food and beverage sector. The rise of the middle class purchasing power in China resulting from strong economic growth has led to greater demand for high quality and nutritious products, which makes the China market attractive to significant premium global players like Arla.”
Stephen was assisted by Shanghai partner Kelly Gregory and Hong Kong partner Amy Ho. They were supported by Beijing counsel Jin Hao, Hong Kong senior associates Fiona Lee and Christina Hui and Shanghai associate Lee Xianwei.
Arla Foods amba is a global dairy company and a co-operative owned by Danish, Swedish and German dairy farmers. It has production facilities in 13 countries and sales offices in a further 20 countries, with a total of more than 17,000 employees.
China Mengniu Dairy Company Limited is a leading manufacturer and distributor of dairy products in China. It is the largest dairy product manufacturer in China in terms of sales and volume.
China National Cereals, Oils and Foodstuffs Corporation is a leading grain, oil and food import and export group and the largest food and drink company in China.
