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China Mengniu Dairy Raises Stake in China Modern Dairy

China Mengniu Dairy Co. (2319.HK) increased its stake in China Modern Dairy Holdings Ltd. (1117.HK) to 28%, bringing two of China's largest dairy companies closer at a time when the domestic industry is working to restore confidence in the safety of its products.The deal, which was announced Wednesday, has been awhile in the making and comes at a time when global dairy companies are eyeing world's most populous country for growth. The two Chinese companies were in talks as long ago as August, a person familiar with the matter told The Wall Street Journal.China's largest milk producer by sales volume previously held a 1% stake in the Modern Dairy, and spent around $407 million to buy additional shares from companies controlled by private-equity firms CDH Investments and Kohlberg Kravis Roberts & Co.Modern Dairy, the country's biggest dairy farming company, isn't new to Mengniu. In 2008, Modern Dairy agreed to sell all of its raw milk to Mengniu at a negotiated price for 10 years--an agr...

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