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When the share price of a dairy company drops more than 13 per cent, it is likely someone somewhere is crying over spilt milk.

Shares in China’s largest organic dairy company fell by the most since 2015 after Inner Mongolia Industrial Group, China’s leading milk producer, scotched plans to buy a 37 per cent stake worth HK$5.19bn ($667m) after failing to win regulatory approval from mainland authorities.

Yili, which first made its approach for China Shengmu Organic Milk in late October, also dropped plans to acquire the outstanding shares in its target as a result of the breakdown of the initial agreement.

According to a Hong Kong Stock Exchange filing on Friday, Yili was unable to win approval from the Anti-Monopoly Bureau of the Ministry of Commerce in China by April 21, thereby leaving the conditions of the underlying share sale and purchase agreement unfulfilled and leading to the automatic termination of the deal. The two companies did not postpone the original closing date.

Shares in Hong Kong-listed Shengmu were down 13.9 per cent to their lowest since late August. The stock had been down by as much as 14.4 per cent. It was the stock’s biggest one-day fall since China’s market rout of summer 2015 and made them the worst performer on Hong Kong’s Hang Seng Composite today.

In October, days before Yili’s offer was announced to the market, Shengmu’s share price hit a two-year high.

Mainland-listed Yili was down 2.6 per cent.

Shengmu says on its web site it is the only dairy company in China that meets European standards for organic milk.

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