Danone is hoping it will be third time lucky in China after the French food group said it would invest €325m in two joint ventures with Mengniu, one of the leading Chinese producers tarnished by a 2008 scandal over contaminated baby formula.
Shares in Mengniu, China’s biggest milk seller by volume, jumped 9 per cent on the announcement as investors’ expectations that Danone’s influence would help improve perceptions of Mengniu’s quality – although the main co-operation will be in yoghurts.
Danone, maker of Activia yoghurt and producer of Evian water, will take a 4 per cent indirect stake in the Chinese company through a joint venture with Cofco, a state-owned agricultural company that is Mengniu’s largest shareholder. The two companies will combine their yoghurt businesses, with Danone taking a 20 per cent stake, to create the biggest company in the sector.