Sector News

Yashili seals $159 mln deal for Danone's Dumex China unit

December 2, 2015
Food & Drink

(Reuters) – Yashili International Group Ltd has completed a 150 million euro ($159 million) deal to buy all of Danone SA’s infant formula unit Dumex China, the firms said on Wednesday.

France’s Danone has been struggling to revive its Dumex China unit after food safety scares damaged the business, squeezing its share of a fiercely competitive $20 billion infant formula market.

“By bringing the Dumex and Yashili brands closer together, the operation will build a strong local infant milk formula (IMF) brand platform,” Danone said in a statement on Wednesday, confirming completion of the deal.

Danone said in July it was planning to sell its flagship Dumex infant formula unit in China, which has been hit by food scares, taking a 398 million euros ($437 million) impairment charge.

Dumex China saw its net sales plummet to 1.3 billion yuan ($203.2 million) in 2013 from 5.7 billion yuan ($890.8 million) in 2012, after a food safety scare in 2013 hit the brand’s reputation with consumers. The scare, linked to New Zealand supplier Fonterra, was later shown to be unfounded.

Mengniu owns just over 51 percent of Yashili, while Danone holds a 25 percent stake.

The deal is subject to approval from authorities and Yashili’s shareholders. ($1 = 0.9410 euros) ($1 = 6.3985 Chinese yuan renminbi) (Reporting by Donny Kwok and Adam Jourdan; Editing by Stephen Coates)

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