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China Mengniu Dairy Co is set to purchase a 51 percent stake in Yashili International Holdings, xinhuanet.com reported Sunday.
The two Hong Kong-listed dairy firms suspended trading on Thursday without an explanation, which was rumored to signal acquisition moves ahead.
The acquisition may be part of the government's push to consolidate the country's dairy sector, according to the report. More than 120 domestic infant formula powder producers have been notified to attend a meeting held by the Ministry of Industry and Information Technology on Tuesday, said the report, at which the ministry will announce important regulations aimed at overhauling the dairy industry.
About two-thirds of the country's 150 infant powder producers may quit the market in the next three to five years in the wake of the likely toughening of the rules, according to the report.
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