Danone reorganises Chinese assets, cuts ties with Mengniu (updated)

China Mengniu Dairy

06/05/2022 16:56

(Adds background, details)
    PARIS, May 6 (Reuters) - France's Danone  DANO.PA  said on
Friday it would end its partnership with Chinese milk firm
Mengniu   2319.HK  by selling a 25% stake it holds in milk
powder maker Yashili as well as a 20% joint venture
participation. 
    In return, Danone will acquire from Yashili 100% of the
Dumex Baby Food infant milk unit. 
    The different parts of the deal, which also includes a sale
of a 20% stake in the Inner Mongolia Diary Joint Venture, will
not need to close at the same time.
    "It is expected that the earliest closing could take place
this year", Danone said in a statement, adding: "The completion
of these transactions will lead to the conclusion of the
partnership Danone held with Mengniu over the last few years." 
    Danone acquired the stake in Yashili, a company controlled
by Mengniu  in 2014 as it sought to step up its presence in the
country's billion-dollar milk market in a deal worth $550
million.    urn:newsml:newsroom:20141031:nNRAjp0ik1:0 
    Since then, Yahili's shares have lost around 70% of their
value, Refinitiv data showed. 
    The French yoghurt maker last year already shed its 9.8%
minority stake in Mengniu, then worth $2 billion, and pledged to
distribute the proceeds to investors as it came under pressure
to boost its shareholder value.  urn:newsml:reuters.com:*:nL1N2MZ0MI  urn:newsml:reuters.com:*:nL1N2N00EF
    "China remains highly strategic for Danone, and today’s
announcement will notably allow the company to further expand
its ability to locally manufacture Infant Milk Formula
products", Danone said on Friday. 
    Danone CEO Antoine de Saint-Affrique said in April that it
was part of his plan aimed at boosting revenue growth to dispose
of underperforming assets.  urn:newsml:reuters.com:*:nL5N2WO5LL
    The company last week said it would sell a minority stake in
an Argentinian water business.  urn:newsml:reuters.com:*:nASM0009LJ
    The cash generated from the latest divestment - for which no
figure was given - will be used to pay back debt, Danone said. 

 (Reporting by Tassilo Hummel
Editing by GV De Clercq)
 ((tassilo.hummel@thomsonreuters.com ; Twitter handle:
@tassilo_hummel;))