COFCO, Danone join forces in dairy sector
- By Xu Lin
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E-mail China.org.cn, May 20, 2013
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COFCO, China's largest food processor, manufacturer and trader, signs an agreement with French food tycoon Danone Group, on establishing a joint venture in the dairy business. [China.com.cn] |
COFCO (China National Cereals, Oils and Foodstuffs Corporation), China's largest food processor, manufacturer and trader, has signed an agreement with French food tycoon Danone Group, on establishing a joint venture in the dairy business.
COFCO has agreed to sell China Mengniu Dairy shares to the newly formed company, and COFCO and Danone will own 51 percent and 49 percent shares respectively. After the transaction, COFCO will still remain the single largest shareholder in Mengniu.
Danone will become Mengniu's strategic shareholder with some four percent shares in the initial stages and is expected to increase its shares based on market conditions.
Meanwhile, according to the framework agreement signed by Mengniu and Danone on Monday, the two companies will combine their respective yogurt businesses in China and form a new joint venture for the production and sales of chilled yogurt products. Mengniu and Danone will own 80 percent and 20 percent shares, respectively, in the new yogurt company.
Danone is expected to invest a total of 2.6 billion yuan (US$423.35) in the abovementioned cooperation projects.
Ning Gaoning, chairman of COFCO, welcomes Danone's cooperation with COFCO. "I hope that both companies take today's cooperation in the dairy business as a starting point to explore more business opportunities by making full use of their advantages in marketing, channels, products and management, as to jointly develop the Chinese market."
Franck Riboud, chairman and CEO of Danone, said, "Backed by COFCO's extensive expertise in the Chinese food industry and by Mengniu's nation-wide leading platform in the dairy sector, our brands will benefit from a significantly wider reach to the largest number of Chinese consumers."
COFCO has declared that the partnership between COFCO and Mengniu with Arla Foods will not be affected by the above agreements.
The transactions are subject to the approval of the relevant government authorities and expected to be completed in a few months.
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