(Yicai Global) Aug. 3 -- Shares of Zhongdi Dairy Holdings more than doubled after Yili Industrial Group said that it will invest HKD203 million (USD26.2 million) to become the raw milk supplier's second-largest shareholder.

Zhongdi's stock price [HKG: 1492] rallied 155.2 percent to HKD1.48 (US 19 cents) in the afternoon, an all-time high.

Yili's shares [SHA:600887] rose 3.1 percent to CNY37.75 (USD5.40).

Yili will purchase about 433 million new shares or a nearly 17 percent stake in Zhongdi for HK 47 cents apiece, the Hohhot-based buyer said in a statement yesterday. The actual controller will remain to be the senior executive team of the Beijing-headquartered target firm.

Late last month, Yili’s main rival Mengniu Dairy invested HKD395 million in Shengmu Organic Milk to become its largest shareholder. Yili and Mengniu collectively make up nearly 50 percent of the domestic dairy market share, while Yili still had 14 percent more in revenue than Mengniu last year.

The acquisition should help Yili to stabilize its supply raw milk and enhance its market competitiveness, the buyer said.

Established in 2014, Zhongdi made CNY102 million (USD14.6 million) in net profit in 2019. Its revenue was CNY1.5 billion (USD215.1 million).

Editor: Emmi Laine