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China Mengniu unit terminates share purchase agreement with Danone Asia

Hong Kong-based dairy company China Mengniu Dairy Co. Ltd. has agreed to terminate the sale of shares in its Chinese subsidiary Yashili International Holdings Ltd., according to a joint filing Aug. 30 to the Hong Kong stock exchange.

In December 2018, Mengniu and Yashili agreed to dispose of 49% of their Hong Kong business, Yashili International Group Ltd., to Danone Asia Pacific Holdings Pte. Ltd., the Singapore-based wholly owned subsidiary of France's Danone SA.

Danone Asia would have acquired the stake in two tranches: the first tranche is the U.S. dollar equivalent of 49% of NZ$315 million, while the second tranche is a sum of the U.S. dollar equivalent of 49% of NZ$2.9 million.

The agreement was extended in May as Yashili and Danone were still working on a service agreement covering the delivery of canned infant formula by Yashili New Zealand to Danone Asia.

In the latest announcement, Mengniu and Yashili said Danone Asia and Yashili mutually decided to terminate the share purchase agreement, without disclosing further details.

"The Mengniu board and the Yashili board consider that the termination is in the interests of Mengniu Dairy and the Mengniu shareholders as a whole, and Yashili and the Yashili shareholders as a whole," it said in the filing.

Mengniu and Yashili added that the decision will not affect the existing and future cooperation between the Yashili Group and Danone.

As of Aug. 30, US$1 was equivalent to NZ$1.59.