HONG KONG - Chinese milk formula maker Yashili International Holdings Ltd said on Friday it has agreed to buy an infant milk formula unit from Danone SA and will work with the French dairy giant on a New Zealand manufacturing plant.
Yashili, 25 percent-owned by Danone and one of China's top 10 infant formula makers by sales, said in a filing to the Hong Kong bourse it plans to acquire Dumex Baby Food Co, a wholly owned Danone Asia unit. Financial terms weren't disclosed, but Danone will use proceeds to buy shares in milk producer China Mengniu Dairy, which owns an indirect 51.04 percent stake in Yashili.
The deal comes as competition grows in the world's largest infant formula market, with both Chinese and foreign firms seeking to shore up market share and locate new expansion channels. China is Danone's fourth-largest market, accounting for around 7 percent of its group sales in 2014.