Mengniu Mengniu the milk snatcher…

Yesterday the FT’s website broke the story of a possible bid by Mengniu Dairy, the Chinese dairy products company, for the Pfizer baby food unit.

Pfizer initially made an announcement back in July of this year that it was going to consider strategic options for its infant nutrition business, which specialises in formulas and nutritional products for young children. At the time the potential spin-off or sale of the business was said to be potentially worth up to $10.5bn to Pfizer and sale mandates were supposed to be available for interested parties from September.

The usual suspects of Danone, Nestle and Unilver were all banded around as possible interested parties. No sale mandates appeared forthcoming and the deal was, according to news reports, pulled by Pfizer in mid-September due to “tax concerns”.

If the “unnamed people familiar with matter” are correct and China’s Mengniu Dairy is in the process of tabling a bid, then this would be its first foray into dealmaking – although not the first time it has been linked to trying to expand its reach, having been linked in 2005, 2007 and 2009 to potential takeovers within China of other dairy producers.

Mengniu was linked to expansion opportunities before the scandal involving melamine-tainted baby formula back in 2008. At the time the scandal was linked to 21 Chinese companies, resulting in hospitalisation of nearly 900 infants.

This incident significantly impacted upon the Chinese people’s confidence in their homegrown baby food suppliers and allowed market share to be taken by foreign companies. If Mengniu does table a successful bid for the Pfizer operation then this would bring back quite a significant homegrown market once more.
 

Filed under: dealmaking, food, Nestle, China