Retailing, Franchising, and Consumerism Business Intelligence in China

China's Mengniu To Establish JV With American Dairy Company

American organic dairy maker WhiteWave Foods Company announced that the company has reached an agreement with China's Mengniu to establish a joint venture which will focus on the manufacturing, promotion and sales of nutritious products in China.

The cooperation will also include an acquisition of Yashili (Zhengzhou) Nutrition Company Limited, a subsidiary of Yashili International. The main assets of Yashili (Zhengzhou) are processing equipment under construction.

Under the agreement signed by the two parties, Mengniu will hold a 51% stake in the joint venture, while WhiteWave will hold the remaining 49%. Meanwhile, the estimated purchase price for Yashili (Zhengzhou) will reach CNY510 million, of which Mengniu will pay 51% and WhiteWave 49%. In addition, the two parties plan to make additional investments to support the initial development and commercialization of the joint venture.

The establishment of the joint venture is still subject to the approval of Chinese regulatory authority and it is expected to be granted in the first half of 2014. The purchase of processing equipment of Yashili (Zhengzhou) will be implemented following the establishment of the joint venture and the consent of minority shareholders of Yashili.

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