Danone to sell 14 percent stake in Yakult amid portfolio diversification

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14 Feb 2018 --- French multinational food products corporation Danone plans to offload part of its 21.29 percent stake in Japan’s Yakult as part of its capital allocation strategy, at the same time as bolstering its collaboration in probiotics by signing a Memorandum of Understanding with the Japanese company.

The dairy giant says it is entering “a new phase in its strategic partnership with Yakult” and is intensifying its partnership to promote and develop probiotics activities that build on the collaboration with Yakult which first began in 2004.

Danone, which also owns the Actimel probiotic brand, plans to sell part of its stake and aims to keep approximately a 7 percent stake in Yakult.Click to Enlarge

The intended divestiture will be carried out through a market transaction which is expected to settle in March. Yakult has also announced a JPY 36 billion share (US$334 million) buyback program in which Danone will participate.

It is not yet known how much the Danone stake could fetch, but some media reports claim it could reach around €1.4bn or more.

Danone has been busy diversifying its portfolio recently with investments in water at the center of its interest.

In November 2017, the company invested in deep water ocean brand Kona Deep and just earlier this month, Danone Manifesto Ventures took a stake in Harmless Harvest, a leader in US refrigerated premium coconut water and a Fair for Life certified organic producer.

Danone’s venture arm has led a US$30 million investment round, alongside other existing and new shareholders, building on Danone Manifesto Ventures’ commitment to supporting companies at the forefront of tomorrow’s food trends.

Last April, Danone acquired organic producer Whitewave, now operating in North America under the name “DanoneWave” and sold its Stonyfield organic yogurt business to allay competition concerns.

“Danone targets a shareholding of approximately 7 percent of Yakult’s total outstanding shares following the completion of the transaction, subject to market conditions. With this, Danone is expected to remain Yakult’s largest shareholder and will continue to sit on Yakult’s Board of Directors,” says a statement from Danone.

Danone says there will be further details when the transaction is complete.

Global Probiotics Council created
Both companies have said that they will intensify efforts to promote probiotics through the jointly created Global Probiotics Council.
 
They also intend to expand the Ishoku Dogen program which aims at deepening the understanding of the link between diet and health.

From a commercial perspective, the partners will study the feasibility of new collaboration projects such as the distribution of Yakult’s products by Danone in European markets where the brand is not currently engaged in substantial business, with Spain being selected as an initial test market.
 
By Gaynor Selby