China Mengniu Dairy : Announcements and Notices - (1) Possible Conditional Mandatory Cash Offers for and on Behalf of China Mengniu Dairy Company Limited to Acquire All the Issued Shares in China Modern Dairy Holdings Ltd. (other Than Those Already Owned Or Agreed to be Acquired by China Mengniu Dairy Company Limited and Parties Acting in Concert with It) and for Cancellation of All Outstanding Options in China Modern Dairy Holdings Ltd.; (2) Major Transaction of China Mengniu Dairy Company Limited

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this joint announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this joint announcement.

This joint announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of China Mengniu Dairy Company Limited or China Modern Dairy Holdings Ltd. nor is it a solicitation of any acceptance, vote or approval in any jurisdiction.

China Mengniu Dairy Company Limited

中國蒙牛乳業有限公司*

China Modern Dairy Holdings Ltd.

中國現代牧業控股有限公司

(Incorporated in the Cayman Islands with limited liability) (Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2319) (Stock Code: 1117) JOINT OFFER ANNOUNCEMENT

1. POSSIBLE CONDITIONAL MANDATORY CASH OFFERS BY UBS AG AND DBS ASIA CAPITAL LIMITED FOR AND ON BEHALF OF CHINA MENGNIU DAIRY COMPANY LIMITED TO ACQUIRE ALL THE ISSUED SHARES IN CHINA MODERN DAIRY HOLDINGS LTD. (OTHER THAN THOSE ALREADY OWNED OR AGREED TO BE ACQUIRED BY CHINA MENGNIU DAIRY COMPANY LIMITED AND PARTIES ACTING IN CONCERT WITH IT) AND FOR CANCELLATION OF ALL OUTSTANDING OPTIONS IN CHINA MODERN DAIRY HOLDINGS LTD.
2. MAJOR TRANSACTION OF CHINA MENGNIU DAIRY COMPANY LIMITED

Financial adviser to China Mengniu Dairy Company Limited Joint financial adviser to China Mengniu Dairy Company Limited

* For identification purposes only

POSSIBLE CONDITIONAL MANDATORY CASH OFFERS

On 4 January 2017, Mengniu entered into a sale and purchase agreement with Success Dairy II, pursuant to which Mengniu has conditionally agreed to acquire and Success Dairy II has conditionally agreed to sell 965,465,750 CMD Shares (being the Subject Shares) for a Consideration of HK$1,873,003,555, payable in U.S. dollars, which is equivalent to US$241,475,350, as determined by the Exchange Rate. The Consideration represents HK$1.94 per CMD Share, which is equivalent to US$0.25 per CMD Share, as determined by the Exchange Rate, assuming the Investor Option is exercised. As at the date of this joint announcement, Success Dairy II holds the Existing CMD Shares and the Investor Option.

As disclosed in CMD's announcement dated 12 December 2016, Success Dairy II has been granted the Investor Option. An irrevocable notice to exercise the Investor Option has been served on CMD by Success Dairy II on 28 December 2016, which is conditional upon, among other things, Mengniu Shareholders having approved the Transaction. Upon exercise of the Investor Option and as clarified by CMD's announcement dated 21 December 2016, CMD shall issue 488,036,618 CMD Shares to Success Dairy II pursuant to the terms of the Investor Option. Together with the Existing CMD Shares held by Success Dairy II, Success Dairy II will hold an aggregate of 965,465,750 CMD Shares, representing approximately 16.7% of the total issued share capital of CMD on a fully diluted basis on SPA Completion, assuming no repurchases or other issuances of CMD Shares. Pursuant to the Supplemental Deed, upon exercise of the Investor Option, Success Dairy II will also be entitled to receive a cash top-up amount of US$13,424,231 which remains to be payable by CMD. Mengniu is not obliged to make payment of such cash top- up amount under the SPA.

SPA Completion is conditional upon the fulfillment (or, with respect to certain Conditions, waiver) of the Conditions as described in the paragraph headed "Conditions to the SPA" under the section headed "Sale and Purchase Agreement" in this joint announcement.

As at the date of this joint announcement, Mengniu owns 1,347,903,000 CMD Shares, representing approximately 25.4% of the total issued share capital of CMD. Immediately after SPA Completion, Mengniu and its Concert Parties are expected to beneficially own in aggregate 2,313,368,750 CMD Shares, representing approximately 39.9% of the total issued share capital of CMD. Mengniu will accordingly be required to make (i) a conditional mandatory cash offer for all the issued CMD Shares not already owned or agreed to be acquired by Mengniu and its Concert Parties pursuant to Rule 26.1 of the Takeovers Code, and (ii) an appropriate offer to the Optionholders for the cancellation of the outstanding CMD Options pursuant to Rule 13 of the Takeovers Code.

Subject to SPA Completion, UBS as the financial adviser and DBS as the joint financial adviser, will make the Offers, for and on behalf of Mengniu, in compliance with the Takeovers Code on the following terms:

PRINCIPAL TERMS OF THE OFFERS The Share Offer

For each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$1.94 or US$0.25 in cash

The Offer Price of HK$1.94 or US$0.25 for each Offer Share under the Share Offer is equivalent to the consideration per CMD Share of HK$1.94 or US$0.25 pursuant to the SPA, assuming the Investor Option is exercised and as determined using the Exchange Rate.

The Share Offer is conditional only upon Mengniu having received acceptances in respect of CMD Shares which, together with the CMD Shares Mengniu intends to acquire from Success Dairy II, will result in Mengniu and its Concert Parties holding more than 50% of the total issued share capital of CMD.

The Option Offer

For each CMD Option with exercise price

lower than the Offer Price . . . . . . . . . . . . . . . . . . . . . . . . . HK$1.94 or US$0.25 less the

exercise price in respect of the relevant CMD Option in cash

For each CMD Option with exercise price

above the Offer Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.0001 or

US$0.000013 in cash

The Option Offer will be extended to all eligible Optionholders in accordance with the Takeovers Code. The Option Offer will be conditional only upon the Share Offer becoming or being declared unconditional.

Details of the Option Offer are set out under the paragraph headed "The Option Offer" under the section "Possible Conditional Mandatory Cash Offers".

As at the date of this joint announcement, there are 5,304,767,883 CMD Shares in issue (of which 1,347,903,000 are held by Mengniu and its Concert Parties), the Investor Option and outstanding 315,962,147 CMD Options conferring rights on Success Dairy II and the Optionholders, respectively, to subscribe for CMD Shares. Save for the aforesaid Investor Option and CMD Options, CMD does not have any other outstanding warrants or derivatives or convertible rights affecting the CMD Shares.

Payment

Accepting CMD Shareholders and Optionholders may elect to be paid in either Hong Kong dollars or in U.S. dollars, but not in both. If no election is made, such CMD Shareholder or Optionholder is deemed to have accepted payment in Hong Kong dollars.

Value of the Offers

Excluding the Non-Accepting Shareholders who will not accept the Offers and assuming that (a) the Investor Option is exercised, (b) there is no change in the issued share capital of CMD other than the issuance of New CMD Shares upon the exercise of the Investor Option, and (c) none of the outstanding CMD Options is exercised prior to the close of the Offers, the Offers are valued at approximately HK$6,413,337,969 in aggregate.

Excluding the Non-Accepting Shareholders who will not accept the Offers and assuming that (a) the Investor Option is exercised, (b) all CMD Options are exercised before they lapse prior to the close of the Offers, and (c) all CMD Shares issued on the exercise of the CMD Options will be tendered for acceptance under the Share Offer, the Offers are valued at approximately HK$6,923,891,360 in aggregate.

Principal terms of the possible Offers are set out under the section headed "Possible Conditional Mandatory Cash Offers" in this joint announcement.

Confirmation of Financial Resources

Mengniu will finance the Offers by internal resources and external debt facilities. UBS has been appointed as the financial adviser and DBS has been appointed as the joint financial adviser to Mengniu in respect of the Offers. UBS and DBS are satisfied that sufficient resources are available to Mengniu to satisfy the Consideration for the Subject Shares under the SPA and the full acceptance of the Offers (excluding the CMD Shares owned by the Non-Accepting Shareholders).

Non-Accepting Shareholders

Mengniu and CMD have received written unconditional and irrevocable confirmations and undertakings from certain CMD Shareholders that they will not accept the Offers. Details of such unconditional and irrevocable confirmations and undertakings are set out in the section headed "Non-Accepting Shareholders".

Listing Status of CMD

As the Non-Accepting Shareholders have indicated that they will not accept the Offers, Mengniu is not expected to be able to acquire the requisite percentage of CMD Shares to enable it to compulsorily acquire all the issued CMD Shares under Cayman Islands Companies Law and the Takeovers Code. Accordingly, after completion of the Offers, Mengniu will maintain the listing status of CMD. Assuming the Offers become or are declared unconditional in all respects, Mengniu will undertake to the Stock Exchange to take appropriate steps following the close of the Offers to ensure that such number of CMD Shares as may be required by the Stock Exchange are held by the public within the prescribed time frame. Any future transactions between the CMD Group and Mengniu Group will be carried out on an arm's length basis and in compliance with the Listing Rules.

No Increase and No Extension Statement

Mengniu has undertaken to Success Dairy II that the Offer Price will be at HK$1.94 or US$0.25 per CMD Share and will not be increased. Accordingly, the Offer Price will remain at HK$1.94 or US$0.25 per CMD Share and will not be increased, and Mengniu does not reserve the right to do so.