Danone wants to sell interest in Mengniu Dairy

French dairy company Danone is preparing to sell its 9,8% stake in Chinese dairy company Mengniu Dairy. The group reported this on February 28. This concerns a book value of € 850 million. According to Danone, the divestment of the Chinese dairy is part of the strategic reorientation the company is working on.

In October, the French dairy giant Danone announced that it was pursuing a strategic reorientation. The group stated that it wanted to sell smaller activities, including the Vega Protein Powder brand and the various Argentinian activities. The company will also divest all activities that do not directly contribute to profitable growth. This also includes the Chinese Mengniu Dairy, in which the group took an interest of 2013% in 9,8.

Food company Danone realized last year 1,4% more profit than a year earlier. In contrast, turnover decreased by 6,6% to € 23,62 million. CEO Emmanuel Faber received a lot of criticism from the shareholders as a result of the mediocre figures. There was even a call to replace him. Faber now says in the press statement, "This step is an example of our commitment to drive portfolio optimization and improve shareholder returns."

Share buyback program
The 9,8% stake in Mengniu is currently held indirectly and has a book value of € 850 million. This indirect interest is converted into a direct interest later in the year for subsequent disposal. The proceeds will be returned to shareholders through a share buyback program, Bloomberg writes. In 2019, the stake in Danone generated € 57 million.  

The management of Mengniu Dairy Company said in a statement that it respected Danone's decision and that the divorce will not affect the business strategies and plans of the Chinese dairy company.

Kimberly Baker

Kimberly Bakker is an all-round editor at Boerenbusiness. She also has an eye for the social media channels of Boerenbusiness.

k.baker @boerenbusiness. Nl

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