Strengthening the upstream industry, modern animal husbandry purchased all shares of Fuyuan with 3.48 billion yuan

On March 23, Hyundai animal husbandry announced that it had entered into a sale and purchase agreement with Mengniu Group and other sellers on the acquisition of Inner Mongolia Fuyuan international industry (Group) Co., Ltd. (hereinafter referred to as “Fuyuan international”), and acquired all shares of Fuyuan international for 3.48 billion yuan. In the view of industry insiders, after the acquisition of Fuyuan international, the competitiveness of modern animal husbandry in raw milk quality and pricing will be further improved, and its leading position in the industry will be further consolidated.

After the completion of the acquisition, the number of dairy cows in modern animal husbandry will increase to about 300000, higher than the 287000 of Youran animal husbandry, which is about to land in the capital market. “After the completion of this acquisition, we will further improve the feed quality of the company, guarantee the raw milk quality from the source, control the feed cost, give full play to the cost-effectiveness, and continuously improve the profitability. At the same time, through effective integration, deepen the integration from the feed purchasing end and the breeding end, and give play to the synergistic effect of the two strong cooperation. ” Modern animal husbandry said in the announcement.

It is worth mentioning that Mengniu is not only the controlling shareholder of modern animal husbandry, but also the single major shareholder of Fuyuan international. Fuyuan international was established in February 2012, with a single major shareholder Mengniu Group holding 43.35%. It is an international resource-based dairy industry chain company, mainly engaged in forage cultivation, dairy farming, feed processing and sales. At present, it operates 14 pastures in China and has about 60000 cows on hand. In addition, Fuyuan international also holds a stake in haykingdom, a US grass giant, which mainly produces and sells high-quality alfalfa.

“The acquisition of Fuyuan international by modern animal husbandry not only expands the company’s feeding scale and improves the total milk production, but also further consolidates the company’s leading position in China’s dairy industry and enhances its market competitiveness.” In an interview with Beijing business daily, the relevant person in charge of modern animal husbandry said that haykingdom, an American grass giant controlled by Fuyuan international, can supply high-quality Alfalfa for modern animal husbandry at the feed end, which helps to improve feed quality, reduce feed cost and guarantee raw milk quality from the source.

In fact, the acquisition of Fuyuan international is also related to the “five-year leading plan” of modern animal husbandry. In December 2020, modern animal husbandry issued the “five-year leading plan”, that is, by 2025, the number of dairy cows will increase to 500000, and the annual output of fresh milk will reach 3.6 million tons, doubling the number of cows and milk.

“The acquisition of Fuyuan international is an important measure for modern animal husbandry to build its own layout, build the first brand of raw milk in China and improve the comprehensive competitiveness of the enterprise. In the future, the company will raise the net growth rate of the core breeding group through independent cultivation and improved variety propagation. At the same time, we will build, expand and merge the pastures in an orderly manner, strive to achieve the maximum output with the minimum input of resources, improve the company’s operation efficiency and profitability, and gradually achieve the “five-year leading plan” to double the output of cattle and milk Modern animal husbandry related person in charge.

In addition, the above transaction is also an integration of Mengniu upstream pasture resources. In addition to Fuyuan international incorporated into modern animal husbandry, Mengniu also owns another listed company, China Shengmu, whose main business is still dairy farming in the upstream of the industrial chain.

In this regard, dairy expert song Liang said that Mengniu first invested in Fuyuan international, and then controlled modern animal husbandry and China Shengmu, continuously expanding the scale of milk production capacity. The merger of Fuyuan international into modern animal husbandry is also to optimize the asset structure, further guarantee the milk supply of Mengniu, improve the efficiency of the supply chain and reduce costs, and solve the internal contradictions of each milk source system. Therefore, this transaction is also Mengniu to open up the internal large animal husbandry system, play a synergistic effect and reduce its comprehensive cost.

Beijing Business News (reporter Qian Yu, Wang Xiao)

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