If approved, the €550m ($692m) deal with long-term investment firm, SNI, will see Danone’s interest in Moroccan dairy firm Centrale Laitière increase to 67%.
Centrale Laitière, of which Danone has held a 29.2% shareholding since 2001, recorded sales of around 6.6bn dirhams (€600m, $745m) in 2011 – accounting for around 60% of the country’s dairy sector.
The firm is a market leader in three core segments – milk, fresh dairy products and cheese.
The acquisition comes as part of an effort to increase its presence in the emerging North African dairy market and prop up weakening sales in Southern Europe countries such as Spain.
Key North African market
Danone, which is already well established in Morocco through products including Yawmy, Moufid and Activia, intends to broaden its presence in the expanding North African dairy market.
“The current transaction represents a key step in Danone’s development in Morocco. It will allow the Group to invest in a market with major potential, and this support growth of the local dairy industry. The move also confirms the strategic appeal of markets in North Africa for Danone,” said a statement from Danone.
The acquisition, which is subject to regulatory approval, is expected to be finalised by the end of 2012.
In 2007, emerging markets accounted for 38% of Danone’s sales. This has since increased significantly to 51%.
Meanwhile, Western Europe’s contribution has dropped dramatically, from 51% in 2007 to 38% currently.
An increase in unemployment and the introduction of new tax and austerity measures in the Eurozone have created an increasingly “complex” region.
As a result, Danone issued a profit warning for 2012 earlier this month – reducing its operating margin target to account for the collapse of dairy product consumption in Spain and other Southern European markets.
Shares in Danone fell by nearly 7% on news of the firm’s lower profit forecast.