China Modern Dairy Holdings Ltd. (CMD) Provides Monthly Update on Potential Mandatory Cash Offer for China Shengmu Organic Milk Limited (CSM)

Key Highlights for Investors

• Potential Takeover: CMD may make a mandatory conditional cash offer to acquire all issued shares of CSM not already owned or agreed to be acquired by CMD and Start Great Holdings Limited. The offer will be made through CLSA Limited, acting as CMD’s agent.
• Offer Status: The offer is conditional and will only proceed if the Share Purchase Agreement (SPA) is completed. Completion requires satisfaction or waiver of specific conditions.
• Regulatory Progress: Key regulatory filings have been submitted to the State Administration for Market Regulation (SAMR) for antitrust clearance, which is a critical step for the transaction.
• Shareholder Approval: CMD has already secured approval from its independent shareholders, a major milestone towards fulfillment of the SPA conditions.
• Next Steps: CMD is actively engaging with the SAMR. Other conditions (apart from regulatory clearance and shareholder approval) are yet to be satisfied or waived.

Detailed Update on the Offer Process

CMD and CSM issued a joint update regarding the possible acquisition. CMD’s intention is to acquire all issued shares of CSM not already held by CMD or Start Great Holdings Limited. This is a significant transaction in the Chinese dairy industry, as it represents a consolidation between two prominent players.

The process is subject to a number of conditions. A critical requirement is the successful completion of the SPA. The SPA itself is contingent on several conditions precedent, notably including:

• Antitrust clearance from the SAMR for the transactions under the SPA and the Offer.
• Approval from CMD’s independent shareholders, which has already been achieved at the EGM held on 16 January 2026.
• Other conditions detailed in the original Rule 3.5 Announcement, which have not yet been fulfilled or waived.

As of the date of the joint announcement (20 March 2026), CMD had completed and submitted all necessary filings to the SAMR. CMD is now in active discussions with the regulator to obtain the required antitrust clearance. This is the cornerstone approval that will determine whether the deal can proceed. If the SAMR does not grant clearance, the offer cannot be made.

Important Information for Shareholders

• Offer Uncertainty: The offer is not guaranteed. It will only be made if all SPA conditions are met or waived. If these requirements are not fulfilled, the offer will not proceed. This uncertainty may create volatility in the share prices of both CMD and CSM.
• Price Sensitivity: Any update regarding regulatory approval—especially from the SAMR—or progress towards SPA completion could move the share prices of CMD and CSM. Investors should closely monitor company announcements for developments.
• Caution Advised: Both companies urge investors to exercise caution in trading their shares during this period of uncertainty. If investors are unsure about their positions, they are strongly advised to consult professional advisers.
• Further Announcements: CMD and CSM will make further announcements in accordance with the Hong Kong Listing Rules and the Takeovers Code as and when appropriate.

Board Responsibility Statements

Both the CMD and CSM boards have confirmed their responsibility for the accuracy of information contained in the joint announcement. They have stated that, to the best of their knowledge and after reasonable enquiry, the update is complete and not misleading.

Conclusion

This transaction remains a potential game-changer for the sector, and its outcome hinges primarily on regulatory clearance. Investors should be alert for further updates, as any regulatory decision or fulfillment of SPA conditions could significantly impact the share prices of CMD and CSM.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should consult their professional advisers before making any investment decisions. The offer described above may or may not proceed, and there are material risks and uncertainties associated with the transaction.

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