France’s Danone merges dairy business with Russia's Unimilk

French foods major Groupe Danone said yesterday that it will merge its Fresh Dairy Product businesses in the CIS area with Russian company Unimilk into a new entity that will generate annual sales of approximately €1.5 billion.

Paris-based Danone will hold 57.5-per cent stake, while Unimilk, Russia's second largest milk processor will hold a 42.5-per cent in the new entity that will have over 18,000 employees and become the leader in dairy products in the CIS area and particularly in Russia, where it will account for around 21 per cent of the market share.

With operations spanning Russia, Ukraine, Kazakhstan and Belarus, the merger will complement Danone operations mainly in western Russia with Unimilk's higher profile in the country's eastern markets.

Although the French yogurt and bottled water producer did not disclose the financial terms of the deal, it did say that its net debt would grow by €1.3 billion ($1.6 billion) as a result of the transaction.

Moscow-based Unimilk, a privately owned company with 2009 sales of €1 billion, is Russia's second largest manufacturer of dairy products and baby food. Founded in 2002, it has 28 production plants in Russia, Ukraine and Belarus and 14,000 employees.

The company also sells its products in Kazakhstan. Unimilk owns the leading dairy brand in CIS ''Prostokvashino'' and has a strong brand portfolio in all market segments.