China's Mengniu and France's Danone jointly announced in Hong Kong that the two parties have signed an agreement under which Mengniu will issue new shares to Danone.
The newly issued shares will reportedly account for 6.6% of the total equity of Mengniu and the trading value is about HKD5.153 billion, which is about USD665 million. On the completion of the deal, Danone's stake in Mengniu will be increased from 4% to 9.9%. Meanwhile, Danone will become the second largest shareholder of Mengniu, following Cofco who holds a 16.3% stake in the Chinese dairy company.
ranck Riboud, chairman and chief executive officer of Danone, said this deal is in line with the strategy for Danone. By further investing in Mengniu, Danone will be able to hold a piece of the huge potential in the Chinese cold dairy market.
Prior to this, Cofco and Danone established a joint venture in May 2013. Via this joint venture, Danone gained about 4% stake in Mengniu.