Danone (DANOY.PK) announced two cooperation projects through joint ventures or JVs in China, where the French dairy giant would invest about 325 million euros ($417 million).
Danone and state-owned Chinese food company COFCO have signed an agreement to form a JV. COFCO and Danone will own 51 percent and 49 percent, respectively, in the newly formed company.
COFCO has agreed to sell 148.01 million shares in China Mengniu, a Hong-Kong listed company, to the JV. Even after the deal, COFCO will continue to be the single largest shareholder inMengniu.
Danone will become a strategic shareholder in Mengniu, owning an indirect interest of around 4 percent at the initial stage, with an aim to increase the interest in the future based on market conditions.
Additionally, Danone and Mengniu also signed a framework agreement to establish a JVfor the production and sales of chilled yogurt products in China. The firm will combine theirassets in this category for a total 2012 proforma net sales of about 500 million euros. Estimated market share is around 21 percent. Danone will own 20 percent and Mengniu 80 percent of the new JV.
COFCO's and Mengniu's strategic partnership with Arla Foods is unaffected by the agreement. The deals are expected to be finalized in the coming months.
The stock fell 1.3 percent in Paris on Friday to settle at 58.11 euros.
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