CHINA: WhiteWave, Mengniu form China JV

By Katy Askew | 6 January 2014

WhiteWave announced tie-up with Mengniu

WhiteWave announced tie-up with Mengniu

WhiteWave Foods and China Mengniu Dairy have formed a joint venture that will enable the US organic and dairy alternatives business to enter the Chinese market.

The venture will market, manufacture and sell a range of "nutritious" dairy products in the country, WhileWave said yesterday (5 January). Under the terms of the deal, WhiteWave will hold a 49% stake in the group.

The newly formed entity will acquire Yashili Zhengzhou, a subsidiary of Yashili International Holdings - a local dairy group which is majority owned by Mengniu.

Zhengzhou is constructing a manufacturing facility in China. It will be used as the manufacturing base for the tie-up.

WhiteWave and Mengniu will each pay their share of the purchase price for Zhengzhou, which is expected to total US$85m. "The parties expect to make additional investments to support the start-up and commercialisation of the joint venture," WhiteWave added.

The deal comes as international dairy players vie to expand in the fast-growth Chinese dairy sector.

Strategic alliances between international players and Chinese companies have become commonplace in recent years, with multinationals hoping to benefit from increased distribution and market access. For their part, multinationals bring technical know-how and supply chain management skills to the table. These capabilities are important in a highly sensitive sector that has plagued by safety scares. 

Show the press release

The WhiteWave Foods Company to Form Joint Venture with China Mengniu Dairy Company JV

The WhiteWave Foods Company to Form Joint Venture with China Mengniu Dairy Company Joint Venture Intends to Enter Fast Growing Market January 05, 2014 06:00 PM Eastern Standard Time DENVER--(BUSINESS WIRE)--The WhiteWave Foods Company (NYSE:WWAV) ("WhiteWave"), a leading consumer packaged food and beverage company in North America and Europe, today announced that it has entered into a joint venture agreement with China Mengniu Dairy Company Limited ("Mengniu"), a leading Chinese dairy company. The joint venture intends to manufacture, market and sell a range of nutritious products in China. The joint venture has also executed an agreement to purchase Yashili Zhengzhou ("Zhengzhou"), a subsidiary of Yashili International Holdings Ltd ("Yashili").

Zhengzhou's primary asset is a production facility currently under construction in China, where the joint venture intends to manufacture its products. Mengniu is the majority owner of Yashili.

"This joint venture is consistent with WhiteWave's strategy to expand into new geographies and provides a unique opportunity for us to access the Chinese market, one of the world's largest consumer markets with a rapidly growing, multi-billion dollar nutritious products segment."

Under the terms of the agreement, WhiteWave will own a 49% stake in the venture and Mengniu will own a 51% stake. The purchase price for Zhengzhou is expected to be approximately $85 million (RMB 510 million), including approximately $62 million (RMB 377 million) for the purchase of equity and the balance for the repayment and assumption of debt and other obligations. Each joint venture party's share of the purchase price for Zhengzhou will be consistent with its ownership interest in the venture. The parties expect to make additional investments to support the start-up and commercialization of the joint venture.

The formation of the joint venture is subject to various governmental approvals in China which are expected to be obtained in the first half of 2014. The acquisition of the production facility is subject to the formation of the joint venture and approval of the minority Yashili shareholders.

Gregg Engles, Chairman and Chief Executive Officer of WhiteWave, said, "This joint venture is consistent with WhiteWave's strategy to expand into new geographies and provides a unique opportunity for us to access the Chinese market, one of the world's largest consumer markets with a rapidly growing, multi-billion dollar nutritious products segment."

Engles continued, "Mengniu is the ideal partner for WhiteWave as it is a leading dairy company in China with a broad product portfolio, strong sales network and manufacturing capabilities, deep consumer expertise and a wide distribution network throughout China. Through the joint venture, WhiteWave will be extremely well positioned to expand its business to this important geography. Although we still have a lot of work to do before we begin distributing product, this is another compelling step for WhiteWave as we continue on our path to change the way the world eats for the better."

Original source: Whitewave Foods

Sectors: Dairy, Emerging markets, Mergers & acquisitions, Natural & organic

Companies: Yashili International Holdings, Mengniu Dairy, WhiteWave Foods

View next/previous articles

Currently reading -

CHINA: WhiteWave, Mengniu form China JV

There are currently no comments on this article

Be the first to comment on this article

Related research

The Whitewave Foods Company - Strategy and SWOT Report

The Whitewave Foods Company - Strategy and SWOT Report, is a source of comprehensive company data and information. The report covers the company’s structure, operation, SWOT analysis, product and service offerings and corporate actions, providing a 3...

China Mengniu Dairy Company Limited : Consumer Packaged Goods - Company Profile, SWOT & Financial Report

Canadean's "China Mengniu Dairy Company Limited : Consumer Packaged Goods - Company Profile, SWOT & Financial Report" contains in depth information and data about the company and its operations. The profile contains a company overview, key facts, maj...

Inner Mongolia Mengniu Dairy Industry (Group) Co Ltd in Packaged Food (China)

Inner Mongolia Mengniu aims to reach its target of being a top 10 global dairy manufacturer by 2015. In order to achieve this, the company will continuously develop its brand image, aiming to present itself as the most quality-oriented, professional ...

Related articles

just-food's research round-up: bakery in Australia, snacks in the UK, dairy in China

This week's featured research from the just-food store includes reports looking at the fiercely-competitive bakery sector in Australia, the growing market for savoury snacks in the UK and China's booming dairy industry.

CHINA: Mengniu upbeat on growth prospects as earnings rise

Chinese dairy major China Mengniu Dairy Co. said today (26 March) expects to capitalise on the growth opportunities presented by the consolidation of an expanding domestic sector.

US: WhiteWave shares jump in adj. Q4 profits

Shares in Alpro owner WhiteWave Foods jumped today (13 February) after the US group reported a jump in underlying earnings.

Welcome to the home of food information, insight & intelligence

Not a member? Join here

Decrease font sizeDecrease font sizeDecrease font size Increase font sizeIncrease font sizeIncrease font size Comment on this article Email this to a friend Print this page