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Danone to acquire majority control in Morocco’s Centrale Laitière

28 June 2012

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Danone has increased its stake in Morocco's leading dairy company Centrale Laitière to 67% with an investment of €550m, to strengthen its presence in North Africa.

Danone, which held a 29.2% stake in Centrale Laitière since 2001, raised its stake by buying a shareholding part of Société Nationale d'Investissement (SNI), an investment vehicle owned by Morocco's royal family.

According to the French food company, this transaction confirms the strategic appeal of markets in North Africa for the company.

Franck Riboud, Danone chief executive, told French daily Les Echos that it plans to generate €1bn in sales from Morocco, Algeria, Tunisia and Egypt, of which €900m will be from dairy products.

The company also plans to launch baby food and medical nutrition products in the region, Riboud added.

The acquisition, which is subject to the approval of relevant authorities, is expected to be completed by the end of 2012.

Danone said that with the majority stake, it will completely integrate Centrale Laitière into its consolidated accounts, and expects the transaction to be accretive to the earnings per share from the first year.

"According to the French food company, this transaction confirms the strategic appeal of markets in North Africa for the company."

Centrale Laitière holds a nearly 60% share in Morocco's dairy market, with a leading position in the three core businesses of milk, fresh dairy products and cheese.

The company, which has sales of €600m, runs four production sites and operates a large distribution platform with 30 storage hubs, serving 70,000 retail outlets.

The deal comes just days after Danone issued a profit warning for the financial year of 2012 because of higher raw material costs and a rapid decline in the demand for its products in Spain and southern Europe.

Danone has been increasing its presence in emerging markets. Since 1997 its sales in western Europe have dropped from 80% to 40%, while sales in emerging markets have gone up from 20% to more than 50%.

Image: Through the acquisition of the majority stake in Centrale Laitière, Danone aims to strengthen its presence in North Africa, amid declining sales in southern Europe. Photo courtesy of: Danone.

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