Mengniu Bought Wyeth &Nbsp; Winning The Game Or Talking About Dreams?

　　 MENGNIU Want to be a Chinese boss?

"If Mengniu buy Pfizer's business, it will mark the dramatic rise of the Chinese company in the world. Buy The door to trade. " In October 24th, according to the financial times, Mengniu Dairy (Group) Limited by Share Ltd (hereinafter referred to as "Mengniu"), 02319.HK, intends to bid for the sale of baby nourishment business (hereinafter referred to as "Pfizer", PFE.NY), which includes the fifth brand of the world's infant formula, Wyeth.

But investors suspect that Mengniu has the ability to "eat" Wyeth. On the day of the takeover news, Hang Seng index It rose 4.14%, while Mengniu's stock fell 1.72% against the market and closed at HK $25.75, which was HK $270 million.

The reason for investors is simple: Pfizer's valuation is $10 billion, almost two times the market value of Mengniu; Mengniu's competitors are too strong, Nestle, Danone, Abbott, Dumex, meadam and Heinz, among which the top three are the hottest "pick ups".

"Pfizer is evaluating the divestiture business. The stripping time is probably in the next 1~2 years, and there should be no update before 2012."

"We have not heard about Mengniu's purchase of Wyeth," Xie Qing, director of public relations at Wyeth, told China Economic Weekly. After the 24 day's closing, Mengniu also made a clarification: "there is no direct negotiation with the Pfizer Inc about the acquisition. There is no actual arrangement or plan for the acquisition."

But it is quite clear that Mengniu said at the same time: "the board of Directors believes that if Pfizer Inc decides to sell its baby food business, it will be a matter of great concern for the dairy industry. The group will also closely monitor the development of other things as other dairy companies. If the company decides to take part in the acquisition and negotiate with the Pfizer Inc formally, the company will comply with all the provisions of the listing rules and issue a notice at the appropriate time to inform shareholders and interested investors. This statement is widely interpreted by the industry as Mengniu's intention to join the ranks of Wyeth.

What is the attraction of Wyeth to Mengniu? According to the data provided by CIC, Nestle has a 19.3% share in the global infant formula market, and the market share of Mead Johnson is 16.4%. Danone, Abbott and Wyeth are 13.5%, 12.1% and 5.6% respectively. As of July 2010, the proportion of Dumex, Mead Johnson, Nestle, Abbott and Wyeth were 16.76%, 12.06%, 10.58%, 7.29% and 4.72% respectively in China's milk powder market. If Mengniu purchased Wyeth's success, Mengniu will become the "China first" and "global fifth" in the infant formula market.

Therefore, the final attribution of Wyeth milk powder will affect the global milk market structure and the pattern of China's milk powder market, and even bring rearrangement of seating arrangements. Zhou Siran, a researcher in the food industry of CIC, told China Economic Weekly that "no matter who successfully bid for Wyeth, they will gain the brand and market share of Wyeth, which will rapidly increase their influence in the global milk powder Market and the voice and pricing power in the Chinese milk powder market, and will help promote the development of future enterprises in emerging markets with the influence of Wyeth in emerging markets."

"But there is a big gap between Mengniu and other bidders, and the possibility of successful takeover is small." Zhou Siran believes that Mengniu's milk powder business is relatively backward. In 2010, Mengniu accounted for 88.8% of its milk products and 10.3% of its ice cream, while the proportion of other dairy products including milk powder was only 0.9%. "Mengniu's milk powder business is still in its infancy." In addition, Mengniu lacks the experience of global operation and management. In the face of such huge bidding funds, Mengniu's ability to raise funds is also challenged.

But at the same time, insiders pointed out that the COFCO group behind Mengniu might become the biggest turning point for the acquisition. "This possibility is not ruled out." Zhou Siran believes that if Mengniu succeeds in acquiring Wyeth, Mengniu will solve the short board of milk powder business, improve market competitiveness and gain a foothold in the international market. "Other enterprises in our country are very concerned, but because the amount of purchase is huge, other enterprises are less likely to participate in bidding."