Shanghai: French food giant Groupe Danone SA, which is embroiled in a long and bitter public feud with a Chinese partner, said Tuesday it was backing out of another venture in the fast-growing Asian market.
Danone will sell its entire 20.01-percent stake in Shanghai-based Bright Dairy and Food for 955 million yuan ($127 million), the Chinese company said.
Danone agreed to sell 104.24 million shares in Bright Dairy at 4.85 yuan per share to each of Bright Dairy’s parent Shanghai Dairy Group and S.I. Products Holdings Ltd, Bright Dairy said in a statement to the Shanghai Stock Exchange.
The statement did not give out any reasons for the sale.
Besides its partnership with Bright Dairy, Danone also has a less-than-satisfying tie-up with China’s top drinks company Wahaha Group.
The two companies have been going through bitter disputes over their joint ventures and ownership of the Wahaha trademark.
Danone said Tuesday in a statement on the Bright Dairy transaction that “the decision of equity transfer is reached on mutually agreed basis, in viewing of the needs of development strategies of both parties”.
“Danone started collaboration with Bright Dairy in 2000 through investment. The two companies have cooperation in product development, technology and management, which has achieved favorable results in the past few years”.
The two companies will also terminate an agreement under which Bright Dairy sold and promoted Danone-branded products and used the French company’s technologies, the Chinese company said.
Danone will pay 330 million yuan to Bright Dairy as compensation for marketing and distribution expense for Danone, it added.
Bright Dairy said the end of cooperation will “not have any significant negative effect on its financial performance or sustaining operations”, although it could impact short-term profit growth.
The deal is still subject to approval from a shareholder meeting on 31 October, the China Securities Regulatory Commission and the Ministry of Commerce.
Danone also forged an alliance with Hong Kong-listed China Mengniu Dairy in December last year to form yogurt joint ventures.