Mengniu to buy controlling stake in Modern Dairy

China Mengniu Dairy Co Ltd, the country's largest dairy producer, is trying to improve product safety and recover lost market share with its acquisition of a controlling stake in China's largest raw milk producer.

Mengniu will pay HK$3.18 billion ($409.8 million), or HK$2.45 per share, for a 26.9 percent stake in China Modern Dairy Holdings Ltd, which operates 22 dairy farms across the country, according to a company filing with the Hong Kong stock exchange on Wednesday.

"Accelerating and expanding investments in quality farms will allow Mengniu to establish a safer and more stable value chain in the dairy sector, to provide healthier and better quality dairy products to consumers," said Sun Yiping, Mengniu's chief executive officer.