Global dairy sector mergers and acquisitions increased from 111 in 2012 to 124 in 2013, highlighting the favorable economic conditions for such transactions. “In an environment of slower underlying growth, mergers and acquisitions are an increasingly attractive route to expanding or defending sales and profits,” according to Rabobank. Despite improved market conditions as a result of world economic recovery, growth in developed markets is not expected to return to pre-financial crisis rates of growth. This will require that companies find other strategies of growth, and mergers and acquisitions provide one such means. However, because dairy deals big enough to improve the sales and profits of large dairy companies will be harder to come by, dairy giants will need to acquire or partner with more smaller companies than they have in the past. Evidence of such transactions can be seen in China Mengniu’s acquisition of Yashili and its new stake in China Modern Diary.
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