(Yicai Global) July 2 -- China Mengniu Dairy will earn an almost nine-fold return on investment from the sale of its controlling stake in Junlebao Dairy, the largest milk products maker in Hebei province.

Mengniu penned a deal on June 30 to sell its 51 percent of Junlebao Dairy to Penghai Venture Capital Fund and Junqian Enterprises Management for over CNY4 billion (USD585 million) in cash, the Hohhot-based seller said in a statement yesterday. It paid CNY460 million (USD67.1 million) for the stake in 2010 to increase its market share in North China.

Junlebao Dairy has intended to separate from Mengniu and go public since 2017 but the schedule remains unpublished, an executive at the company, who wished to stay anonymous, told Yicai Global. Junlebao's management team and business model will not change after the equity transfer, the person added.

Shares of Mengniu [HKG:2319] rose 1.3 percent to close at HKD30.65 (USD3.93) each today. The benchmark Hang Seng Index gained 1.2 percent. The stock has climbed about 25 percent since the end of last year.

Junlebao Dairy has been functioning independently and the pair has different strengths in products so Mengniu is selling the stake to focus on its core business and new investments, the parent added in the statement. Junlebao has developed rapidly in the fields of pasteurised products and baby formula in recent years and its total revenue exceeded CNY13 billion last year.

Editors: Dou Shicong, Emmi Laine