Danone finalises sale of its stake in Chinese dairy Mengniu
25 May 2021 – Shanghai – French Food conglomerate Danone SA has finalized the sale of its approximate 9.8 percent stake in China Mengniu Dairy Co Ltd on Thursday as the French company concentrates its efforts on health-focused and fast-growth categories in the Chinese market.
The transaction is valued at HK$15.4 billion ($1.98 billion) and settlement of the transaction will take place on 17 May. The majority of the proceeds will be returned to shareholders through a share buyback program, according to Danone.
The sale was launched on Wednesday via an accelerated bookbuilding process after Danone converted its indirect stake in Mengniu into a direct holding earlier this year.
In 2013, Danone invested in two joint projects with China Mengniu Dairy to leverage Mengniu’s large distribution network in tapping the high-end chilled yogurt market in the country.
Mengniu has also benefited from Danone’s technology and knowhow in the frozen and chilled dairy products sector. However, eight years on, Mengniu’s own yogurt business as well as infant and baby formula units have accelerated quickly, forming potential competition with Danone’s special nutrition unit, Zhu said.
The move to sell stakes in Mengniu is in line with Danone’s investment highlights－dairy and plant-based products, water and specialized nutrition goods.
Danone, which manages a series of leading international brands, including Aptamil, Evian and Nutricia, generated 23.6 billion euros ($28.5 billion) in global sales in 2020.
The updated commitment to the acceleration of its production and research capacities has shown the company’s strong confidence in growth opportunities in the Chinese market.
Bruno Chevot, president of Danone Greater China & Oceania, said, “Over the next five years, Danone will push its strategy of ‘innovated in China, made in China’ to a higher level.”
Leveraging local R&D and production capabilities, Danone will accelerate the transformation of cutting-edge research achievements into top-notch nutrition solutions produced locally to better serve Chinese consumers and contribute to the Healthy China 2030 initiative, he said.
Chevot added that in the coming five years, the company will build on its rich resources and vast experience accumulated in the nutrition and health industry over the years, as well as its health and consumer insights into the Chinese market, to fully tap the potential of its open science research center and Qingdao plant.
Danone has set up special nutrition production plants in Qingdao, Shandong province, and Wuxi, Jiangsu province, to drive up production.
“We plan to further diversify our range of offerings in China and bring more quality products ‘innovated and made in China’ to local consumers, thereby better catering to their upgraded nutrition needs,” Chevot said.
China is Danone’s second-largest market globally. In 2019, Danone’s revenue generated in China contributed to nearly 10 percent of its global sales.
