Vinamilk tetrapacks. Reuters

Jardine Cycle & Carriage, a retailer of motor vehicles, parts and accessories, on Monday said its unit would buy a stake of 5.53 percent in Vietnam Dairy Products Joint Stock Co (Vinamilk) for US$616.6 million in cash.

The acquisition, to be funded by JC&C through internal resources and external borrowings, will be done through the market and its successful participation in an auction by the State Capital Investment Commission of Vietnam (SCIC) last Friday. SCIC is the largest shareholder of Vietnam-listed Vinamilk.

Vinamilk, previously known as Vietnam Milk Co, is a leading dairy producer in Vietnam with a market share of approximately 58 percent. It currently operates 13 dairy factories, owns 10 cow farms and has one of the strongest distribution networks in Vietnam with more than 240,000 retailers as exclusive distributors.

The acquisition is in line with the company's strategy of investing in market leading companies in Southeast Asia and increases JC&C's exposure to the Vietnamese economy, the company said in a regulatory filing.

Assuming that Vinamilk was acquired in January 2016, the proforma financial effects of the deal would see JC&C's earnings per share increase from 178 US cents to 180 US cents.

Shares in Jardine Cycle & Carriage were up 0.05 percent at S$39.22 on the Singapore Exchange.