On July 21, Meiji Holdings announced that it will transfer its milk and yogurt businesses and B-to-B business in China to Shanghai AustAsia Food Co., Ltd.
The move is part of a portfolio restructuring in response to changes in the business environment in the Chinese market. Meiji will transfer the businesses concerned to a partner better suited to their growth, while allocating management resources more heavily to priority areas, including its cacao business.
The businesses to be transferred comprise the relevant businesses of Meiji (China) Investment Co., Ltd., as well as Meiji Dairies (Tianjin) Co., Ltd. and Meiji Dairies (Suzhou) Co., Ltd. Meiji Dairies (Tianjin) manufactures milk, yogurt, and other products, while Meiji Dairies (Suzhou) manufactures dairy products including milk, yogurt, and cream.
The transfer price is ¥320 million, or approximately ¥7.6 billion. The transaction is scheduled to be completed on December 31. Meiji Holdings explained that the operating environment in China’s milk and yogurt market has changed significantly because of diversifying consumer needs, changes in sales channels, intensifying competition, and rising raw-material and logistics costs. The company has considered an operating structure that will lead to sustainable growth with the aim of increasing corporate value over the medium to long term.
AustAsia Group Ltd., the parent company of Shanghai AustAsia Food, the transferee, operates raw-milk and beef-cattle businesses as well as dairy-product sales and distribution operations in China. Meiji judged that integration with the group would be expected to generate synergies in areas such as raw-material procurement, manufacturing efficiency, sales channels, and factory utilization rates, leading to strengthened profitability in the businesses concerned.
Intellectual property rights related to yogurt products in general, including lactic acid bacteria, as well as certain brands, are not included in the transfer. In addition, the manufacturing site of Meiji Food (Guangzhou) is not included and will continue operating as a manufacturing base for the cacao business.
