French dairy heavyweight Danone has been given the green light to purchase up to 49% of Yashili New Zealand Dairy Co.
The approval, from New Zealand’s Overseas Investment Office (OIO), means that, when added to its existing stake, Danone, through its Danone Asia Pacific unit, would control 65% of the dairy processor.
In a statement sent to just-food confirming the deal, a Danone spokesperson said: “We have indeed received approval by The New Zealand Overseas Investment Office.
“But the process is still ongoing as closing of the transaction remains subject to other customary conditions.”
Yashili New Zealand has been a supplier of base powder products and dairy ingredients to Danone since 2016.
Hong Kong-listed infant-formula business Yashili International Holdings announced in December that it had entered into a definitive transaction agreement to sell to Danone 49% of Yashili New Zealand, which owns Yashili’s infant formula production facility located in Pokeno in the Waikato region.
Danone had signed a memorandum of understanding with Yashili last June on a possible deal.
Now it has been cleared by the OIO, which said in a statement reported in the New Zealand media: “The applicant has satisfied the OIO that the individuals who will control the investment have the relevant business experience and acumen and are of good character. The applicant has also demonstrated financial commitment to the investment.”
No figure has been put on the transaction but before Christmas, Danone and Yashili said Danone is to pay around NZD155.6m (US$103.2m at the exchange rate then) for the 49% stake with an investment subsidiary of Yashili International Holdings, Yashili (HK), holding the rest.
Yashili NZ’s dairy factory is capable of producing 52,000 tonnes of infant formula a year.
China Mengniu Dairy, one of China’s largest dairy companies, owns just over 51% of Yashili International Holdings, which is publicly-listed in Hong Kong. Danone is also a shareholder in China Mengniu Dairy.