Danone secures Russia expansion with Unimilk deal

Danone (DANO.PA) drove deeper into the fast-growing Russian dairy market on Friday, announcing a planned merger with Unimilk (KUNMI.RTS) which could pave the way for more consolidation in the European food sector. The world's largest yoghurt maker said the new entity would have around 21 percent of the Russian dairy market and lead sales in the Commonwealth of Independent States (CIS). The combination of the two companies' fresh dairy business in Russia, Ukraine, Kazakhstan and Belarus would have annual sales of about 1.5 billion euros ($1.8 billion). Danone will hold 57.5 percent and Russia's Unimilk 42.5 percent. "The CIS is a group of countries where the potential penetration and growth of the category both in terms of volume and value ... is among the most significant," Danone Finance Director Pierre-Andre Terisse said. Danone, meanwhile, will rethink its options for its 18 percent stake in Russian juice and dairy maker Wimm-Bill-Dann (WBD.N), Terisse told a conference call with analysts. Wimm-Bill-Dann said separately it was ready to buy the stake. Danone, whose last transformational deal was the 12.3 billion euros purchase of the baby and medical nutrition business of Dutch rival Numico three years ago, made no secret it was looking at acquisitions. But it had pointed to expansion via small bolt-on deals in dairy, medical nutrition, baby food and in emerging countries.

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