The French dairy company has a long history with Wimm Bill Dann Foods, which includes an aborted acquisition attempt back in 2003.
Now Danone has decided to part company entirely, having agreed to sell its 18.4 per cent stake in Wimm Bill Dann Foods back to the Russian company for a total consideration of $470m.
The sale of the stake will close once Danone has the necessary regulatory approvals for the merger of its CIS operations with Unimilk.
Danone announced last month that it had agreed to merge its Russian and CIS dairy business with that of Unimilk to create a new entity with annual sales of about €1.5bn.
Under the terms of that deal, Danone will control a 57.5 per cent interest in the new entity, which will count 18,000 employees with operations in Russia, Ukraine, Kazakhstan and Belarus. The Danone-Unimilk business will inherit a 21 per cent market share in Russia.
As a result of the Unimilk deal, Danone will increase its net debt by €1.3bn. Selling its share in Wimm Bill Dann Foods is therefore a way of improving the health of its balance sheet.
Wimm Bill Dann Foods
And as for Wimm Bill Dann Foods, it is an opportunity to buy back shares at a discount. In addition, the Russia company has enough spare cash to be able to fund the transaction from existing resources, without the need for additional financing.
“This announcement and the outright purchase of our own shares reflect our confidence in the fundamentals of the business and our strategy for the future,” said Tony Maher, CEO of Wimm Bill Dann Foods.