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4.1 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 4. Associates
DANONE
REGISTRATION DOCUMENT 2015
89
2014 fiscal year
Ownership as of December 31
(in percentage)
Notes
Division
Country
Transaction
date
(a)
2013
2014
Main companies accounted for using the equity method for the first time during 2014
Mengniu
(b)
4.4
Fresh Dairy
Products
China
January
4.0%
9.9%
Danone group's and Mengniu
group's fresh dairy products
companies in China
(c)
4.4
Fresh Dairy
Products
China
July
−
20.0%
Brookside
(d)
Fresh Dairy
Products
Kenya
July
−
40.0%
Main associates with change in ownership percentage
Yakult
(e)
Fresh Dairy
Products
Japan
January
20.0%
21.3%
Main companies no longer accounted for using the equity method as of December 31
–
(a) Month of the 2014 fiscal year.
(b) INNER MONGOLIA MENGNIU DAIRY (GROUP) CO LTD. This company was recognized within Investments in other non-consolidated companies in 2013.
(c) INNER MONGOLIA MENGNIU DANONE DAIRY CO LTD.
(d) BROOKSIDE AFRICA LIMITED.
(e) YAKULT HONSHA CO LTD.
Note 4.4. Mengniu (Fresh Dairy Products, China) and Yashili (Medical Nutrition, China)
Background to the acquisition of these equity interests
On May 20, 2013, Danone announced that the Group had signed
agreements with COFCO and Mengniu to join forces to accelerate
the development of fresh dairy products in China. Under the terms
of these agreements, Danone became a strategic shareholder in
Mengniu and a joint venture for the production and sale of fresh dairy
products in China was established by the pooling of the respective
assets of the two companies. Danone owns 20% and Mengniu 80%
of the new joint venture.
On October 31, 2014, Danone, Mengniu and Yashili announced the
extension of their strategic alliance into infant milk formula in China
through the signing of an agreement allowing Danone to take part
in a private placement by Yashili totaling around €437 million on
that date, corresponding to HKD 3.70 per share and representing
25.0% of Yashili's share capital.
On February 12, 2015, the Group took part in Yashili's private place-
ment. The price per share paid was the price set under the terms of
this agreement, which represented a total amount of €499 million
on that date. As a result of this transaction, Danone held a 25.0%
stake in Yashili and became its second-largest shareholder behind
Mengniu, which had a 51% stake. Under the terms of this agreement,
Danone has recommended a candidate to serve as Yashili's Chief
Executive Officer.
Lastly, on July 24, 2015, Danone announced it had entered into a
preliminary agreement with Mengniu and Yashili with a view, on the
one hand, to merge Dumex in China with Yashili, thereby building a
strong local infant milk formula brand platform, and, on the other
hand, to increase its shareholding in Mengniu. The final agreement
for the sale of Dumex in China to Yashili was signed on December 1,
2015. The sale price was €150 million and the agreement is subject
to the approval of the competent authorities and Yashili's share-
holders. The impacts of this agreement on the 2015 consolidated
financial statements are described in Note 6.2 of the Notes to the
consolidated financial statements.
Mengniu (Fresh Dairy Products, China)
Accounting treatment of the investment
This investment, which is a strategic investment for the Group, is
recognized under Investments in associates, since the Group has
significant influence over the financial and operating policies of the
Mengniu group as (i) a strategic shareholder in the Mengniu group
pursuant to the agreements with COFCO, (ii) its participation in
Mengniu's governance, and (iii) the Group's operating involvement
in Mengniu's fresh dairy products activities.