Danone Expands its Chinese Strategic Alliance
Danone is to subscribe to a private placement totaling €437 million by Yashili, one of China’s leading infant milk companies. Upon completion of the subscription, Mengniu, currently Yashili’s majority shareholder, will hold a 51.0% equity interest and Danone will hold 25.0%. As part of this agreement, Danone will recommend candidates to serve as Yashili’s chief executive.
Through this alliance, Danone, Mengniu and Yashili intend to expand and strengthen their cooperation in the infant milk formula (IMF) business in the People’s Republic of China (PRC). The parties will study the possibility of an equity investment in Danone’s subsidiary Dumex China with a comparable minority stake.
This transaction extends the scope of the strategic alliance in fresh dairy products first established in 2013 between Mengniu, Danone and COFCO, China’s leading state-owned company in the food sector.
Emmanuel Faber, chief executive of Danone, comments: “Building on our successful cooperation in fresh dairy products, we are strengthening the winning team formed by Danone and Mengniu by acquiring an equity stake in Yashili—combining Mengniu’s wide-reaching network in China with Danone’s international expertise in infant milk products. I am delighted with this transaction and am confident in our ability to grow all of our brands in the Chinese market.”
Danone’s acquisition of an equity stake in Yashili is subject to the approval of the company’s shareholders at their Extraordinary General Meeting and of the relevant authorities. It is expected to be finalized in coming months.
