PARIS — Danone has entered a joint-venture agreement with COFCO, the largest food company in China, as well as with China Mengniu, a Hong-Kong listed company.
COFCO will have 51% stake in the new company with Danone having 49%, and COFCO will sell 148,014,022 shares in China Mengniu to the joint venture. COFCO will continue to be the largest shareholder in Mengniu after the transaction. Danone will own 4% in Mengniu after the transaction with the intention of increasing its stake.
Danone and Mengniu also signed an agreement to establish a joint venture for the production and sale of yogurt products in China. Danone will own 20% and Mengniu will own 80% of the new joint-venture in China.
“COFCO welcomes Danone,” said Frank Ning, chairman of COFCO. “As the largest state-owned company in the food sector, COFCO has the responsibility to further develop dairy products in China. I hope COFCO and Danone will take today’s cooperation in the dairy sector as a starting point and explore more cooperation opportunities in the future by leveraging respective advantages in marketing, channels, product and management in order to jointly develop the Chinese market.”
Danone is investing more than $418 million through the joint ventures. The transactions are subject to regulatory approval and expected to be finalized in the coming months.