China Mengniu Dairy : Circulars - Major Transaction in Relation to the Possible Conditional Mandatory Cash Offers for China Modern Dairy Holdings Ltd.

If you are in any doubts as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares in China Mengniu Dairy Company Limited, you should at once hand this circular to the purchaser or the transferee or to the bank, licensed securities dealer, registered institution in securities or other agent through whom the sales or transfer was effected for transmission to the purchaser or the transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, 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 circular.

This circular is for information purposes only and does not constitute an offer or invitation to subscribe for or purchase any securities nor is it calculated to invite any such offer or invitation.

CHINA MENGNIU DAIRY COMPANY LIMITED

中國蒙牛乳業有限公司*

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2319) MAJOR TRANSACTION IN RELATION TO THE POSSIBLE CONDITIONAL MANDATORY CASH OFFERS FOR CHINA MODERN DAIRY HOLDINGS LTD. AND NOTICE OF EXTRAORDINARY GENERAL MEETING Financial adviser to China Mengniu Dairy Company Limited Joint financial adviser to China Mengniu Dairy Company Limited

A notice convening an EGM of China Mengniu Dairy Company Limited to be held at the Ballroom, Level 3, JW Marriott Hotel Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Friday, 3 February 2017 at 10:00 a.m. is set out on pages V-1 to V-2 of this circular.

Whether or not you are able to attend the EGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Hong Kong share registrar of China Mengniu Dairy Company Limited, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong, together with the power of attorney or other authority (if any) under which it is signed (or a notarially certified copy thereof), not less than 48 hours before the time for holding the EGM. The completion and return of the form of proxy shall not preclude you from attending and voting in person at the EGM (or any adjourned meeting thereof) if you wish.

* For identification purposes only 16 January 2017

Page

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Letter From the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Appendix I - Financial Information of the Mengniu Group . . . . . . . . . . . . I-1 Appendix II - Financial Information of the CMD Group . . . . . . . . . . . . . . . II-1 Appendix III - Unaudited Pro Forma Information of the Enlarged Group . . III-1 Appendix IV - General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1 Appendix V - Notice to the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

In this circular, the following expressions shall have the following meanings unless the context requires otherwise:

"associate(s)" has the meaning ascribed thereto under the Takeovers Code

"Business Day" means a day other than a Saturday or Sunday or public holiday in Hong Kong

"Cayman Islands Companies Law"

the Companies Law Cap. 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands

"CMD" China Modern Dairy Holdings Ltd., a company incorporated in the Cayman Islands with limited liability, the issued CMD Shares of which are listed on the Main Board of the Stock Exchange (stock code: 1117)

"CMD Board" the board of directors of CMD

"CMD Directors" the directors of CMD

"CMD Group" CMD and its subsidiaries

"CMD Option(s)" outstanding share option(s) granted by CMD pursuant to the Management Option Scheme, Share Option Scheme I, Share Option Scheme II and Share Option Scheme III

"CMD Shares" ordinary share(s) of par value HK$0.10 each in the share capital of CMD

"CMD Shareholder(s)" holder(s) of the CMD Share(s)

"Composite Document" the composite offer document and offeree board

circular in respect of the Offers to be despatched to the CMD Shareholders and Optionholders

"Concert Parties" with respect to a party, parties acting in concert with it as such term is defined under the Takeovers Code

"Conditions" conditions to SPA Completion, further details of which are set out in the paragraph headed "Conditions to the SPA" under the section headed "Sale and Purchase Agreement" of this circular

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"connected person" has the meaning ascribed to it in the Listing Rules

"Consideration" HK$1,873,003,555, payable in U.S. dollars, which is equivalent to US$241,475,350 or HK$1.94 per Subject Share, which is equivalent to US$0.25 per Subject Share, as determined by the Exchange Rate

"DBS" DBS Asia Capital Limited, an institution licensed to carry out Type 1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) regulated activities under the Securities and Futures Ordinance (Chapter 571, Laws of Hong Kong), the joint financial adviser to Mengniu in relation to the Offers

"EGM" extraordinary general meeting of Mengniu to be held for the purpose of enabling Mengniu Shareholders to consider and vote to approve the Transaction

"Enlarged Group" the Mengniu Group immediately after completion of

the Offers

" C" the euro, the official currency of the eurozone

"Exchange Rate" US$1:HK$7.7565, being the closing mid-point HK$ to US$ "bank buy" and "bank sell" exchange rate announced by the Hong Kong and Shanghai Banking Corporation Limited on the date immediately preceding the date of the SPA

"Executive" the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director

"Existing CMD Shares" 477,429,132 CMD Shares held by Success Dairy II as at

the date of this circular

"HK$" Hong Kong dollars, the lawful currency of Hong Kong

"Hong Kong" Hong Kong Special Administrative Region of the PRC

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