Danone sells its stake in Huiyuan for 200 million euro

Groupe Danone SA, the world's biggest yogurt maker, announced that it will sell its 23 percent of stake in China Huiyuan Juice Group to private equity firm SAIF Partners for 200 million Euros. Huiyuan confirmed the news in an announcement submitted to the Hong Kong Stock Exchange yesterday.

The deal was priced at 6 Hong Kong dollars per share, higher than Huiyuan's closing price of 5.42 yuan per share on July 28.

Danone said that the deal is in line with its strategy in the Chinese market. After the deal is completed, it will focus on four key businesses in China: fresh dairy products, water drinks, baby food and medical nutrition.

Danone entered the Chinese market in the 1980s and has 20 factories and 9,000 employees on the Chinese mainland. Danone recently issued its second quarter financial report indicating that its net profit in the first half was down by 10 percent because the rise in material costs squeezed its operating profitability.

Earlier, Danone terminated its cooperation with other Chinese food giants, including Wahaha, Bright Dairy and Mengniu. Danone will independently develop all its four key businesses on the Chinese mainland in the future.

Andrew Y. Yan, chief partner of SAIF Partners, said the private equity firm will not be directly involved with Huiyuan's management, but rather bind its own interests with Huiyuan's through a generous employee motivation plan.

According to Huiyuan's 2009 annual report, it gained 233.5 million yuan, an increase of about 163 percent from a year earlier. A survey by A.C. Nielson shows that at the end of 2009, Huiyuan was China's largest pure fruit juice and mixed fruit-vegetable juice producer in terms of sales volume and value, seizing a market share of 52 percent and around 46 percent, respectively.

By People's Daily Online