China Modern Dairy Holdings Ltd. (CMD, stock code: 1117) announced on October 30, 2025 (after trading hours) the signing of Share Purchase Agreements with three shareholders of China Shengmu Organic Milk Limited (CSM, stock code: 1432): SMbeidou, SMhateng, and SMwuxing. Under these agreements, CMD plans to acquire a total of 107,200,000 CSM shares, representing approximately 1.28% of CSM’s total issued share capital, for HK$37.52 million in cash.

Concurrently, a Voting Rights Agreement was entered into among CMD, Start Great, and Mengniu. Start Great—which holds about 29.99% of CSM—irrevocably granted a proxy to CMD covering voting rights attached to 2,086,942,512 shares, or approximately 24.90% of CSM’s issued share capital. This arrangement aims to help CMD consolidate CSM as a subsidiary if conditions are met.

Upon completion of any of the share purchases, CMD and its concert parties would hold at least 30% of CSM’s share capital, triggering a possible mandatory conditional cash offer at HK$0.35 per share for the remaining CSM shares not already owned or agreed to be acquired by CMD and Start Great. The maximum consideration under this offer could reach approximately HK$2.016 billion if fully accepted.

CMD highlights that the offer will be conditional upon valid acceptances resulting in CMD and its concert parties holding more than 50% of CSM’s voting rights. If this acceptance threshold is not reached by the offer closing date, the offer will lapse. CMD intends to maintain CSM’s listing on the Hong Kong Stock Exchange and will take steps to ensure sufficient public float.

The transactions constitute both a major and connected transaction for CMD under the Listing Rules, as Mengniu (CMD’s controlling shareholder) indirectly holds 29.99% of CSM via Start Great. CMD has established an independent board committee and appointed an independent financial adviser to evaluate the proposed transactions. CMD will convene an extraordinary general meeting for shareholders to consider and vote on the acquisition and the potential offer. The related circular is expected to be dispatched on or before December 15, 2025.

CMD and CSM shareholders and investors are advised to exercise caution given that the acquisition and the possible mandatory conditional offer remain subject to conditions and approvals. Further announcements will be made by CMD upon satisfaction of the relevant conditions.