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.
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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.
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By GlobalDataStrategic 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.
