Groupe Danone SA agreed to sell its stake in China’s biggest pure-juice maker to SAIF Partners Ltd., a venture capital fund focused on China and India, for $200 million euros ($260 million).
The Hong Kong-based fund, which manages $4 billion, will acquire the 22.98 percent stake in China Huiyuan Juice Group Ltd. for HK$6 a share, Danone said in a statement. That’s 11 percent more than today’s closing price of HK$5.42 on the Hong Kong stock exchange.
Danone, the world’s biggest yogurt maker, in September 2009 sold its stake in Chinese food and beverage maker Hangzhou Wahaha Group Co., ending two years of lawsuits with its partner. The Paris-based company, which has operated in China since 1987, has since vowed to avoid joint ventures in the country and to build operations on its own.
“Their problems with Wahaha have scared them,” said Shaun Rein, managing director of China Market Research Group in Shanghai. “They want to take a step back, make some money from Huiyuan and redevelop a better strategy for China.”
Beijing-based Huiyuan is competing for beverage sales as Coca-Cola Co., PepsiCo Inc. and other overseas drink makers boost spending in China to expand beyond soft drinks.
Shares of Huiyuan have fallen 35 percent since the Ministry of Commerce rejected Coca-Cola’s $2.3 billion takeover bid in March 2009, saying the deal would have hurt competition in the nation’s drinks market. Coca-Cola offered to pay HK$12.20 per Huiyuan share.
The sale of Danone’s 51 percent stake in ventures with Wahaha ended an almost 12-year partnership that collapsed in 2007 amid more than 30 lawsuits and accusations that Wahaha Chairman Zong Qinghou unlawfully sold Wahaha-branded juice and tea outside their partnership.
“Danone may sell because it only has a minority stake in the business and may prefer to use the funds to expand organically in China or put towards a controlling stake in another venture,” said James Targett, an analyst at Consumer Equity Research in London.
Danone gets more than 40 percent of its sales from emerging markets, a higher proportion than its bigger rival, Switzerland’s Nestle SA.