China’s Largest Dairy Company Makes Offer on Baby Formula Provider

On June 18, China Mengniu Dairy, China’s largest dairy producer, said it made an offer of $1.6 billion to buy Yashili International, one of China’s leading makers of infant milk formula and baby food.

Yashili was one of 22 baby formula producers in China whose products were flagged by Chinese quality control inspectors in 2008 because they had been contaminated with melamine, an industrial plastic. At the time, Yashili blamed raw milk dealers, and it suspended production and issued several product recalls. In 2009, Yashili brought in private equity firm Carlyle Group as a minority investor, and in 2010 it announced that it has begun importing all of its raw milk powder from overseas suppliers, mainly in New Zealand.