French dairy firm Danone is planning to sell the Dumex infant formula brand to Yashili International Holdings and use the proceeds to increase its stake in Mengniu, Yashili’s indirect parent, according to reports in Bloomberg and the Financial Times.
The move comes as demand for locally-produced baby food has dipped in China, Bloomberg notes. The company said it would now increase its 9.9 % stake in Mengniu by no more than 2 percentage points. Separately, it said it would also take a €398 million ($436 million) impairment charge related to a lowering of the sales forecasts for the Dumex brand in China.
Danone has been increasing its interest in the Chinese market in recent years. Last October it made an investment of $550 million to more than double its stake in Mengniu through a joint venture with the firm’s parent company Cofco Dairy Investments.
Source: Bloomberg / Financial Times