Danone is set to pay $663 million to increase its shareholding in China Mengniu Dairy to 9.9 percent from 4 percent, a purchase that will be made through a joint venture with Mengniu's parent company Cofco and Denmark's Arla foods.
Danone chief executive Franck Riboud called the deal a "winning combination" for the companies involved. "This transaction is consistent with Danone's strategy to increase our interest in and join hands with Mengniu to capture the huge growth potential of the chilled dairy products market in China.”
China, the world’s most populous country, has seen a growing demand in recent years for foreign brands and dairy products, particularly with its own still reeling from the loss of consumer trust after baby formula tainted with melamine tragically killed six infants in 2008.
The deal with Danone still needs to be approved by Mengniu's shareholders, however it is expected to be finalised by the end of the year.