The WhiteWave Foods Co. (NYSE:WWAV), a leading consumer packaged food and beverage company in North America and Europe, announced that it has entered into a joint venture agreement with China Mengniu Dairy Co. Ltd., 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, a subsidiary of Yashili International Holdings Ltd. 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.
Under the terms of the agreement, WhiteWave will own a 49 percent stake in the venture and Mengniu will own a 51 percent 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.”