Danone spent $347m raising its stake in Morocco's top dairy company, in its second emerging-market deal in four days, as peer Fonterra also brandished its credentials in developing countries, which dairy groups are relying on for growth.

Danone, the French-based dairy giant, said it had bought 21.75% of Centrale Laitiere for 3.073bn dirham ($347m), in its second purchase in the Moroccan group since an initial investment in 2001.

Monday's purchase, from SNI, the investment group backed by Morocco's royal family, took Danone's stake to 90.9%.

The purchase price equates to 1,500 dirham per share, a premium of some 100 dirham per share to the close price of Centrale Laitiere stock on Friday, although the shares rose 50 dirham to 1,450 dirham per share in Casablanca on Monday.

With SNI owning a 26.75% stake before today's deal, it appears that SNI will retain a 5.0% holding in Centrale Laitiere, which has a share of nearly 60% of Morocco's fresh dairy market.

Centrale Laitiere last year achieved a 3.6% rise to $7.01bn in sales, extending an unbroken run going back until at least 2000, but earnings more than halved to a 13-year low of 220.5m dirham.

Lure of emerging markets

While Danone made no specific comment on Monday's deal, the group is known to harbour a desire to expand in emerging markets, and on Friday unveiled the purchase of 25.0% of Yashili, a major operator China's infant formula market.

Indeed, the strategy of targeting developing countries is being following by many Western dairy groups, in the face of stagnant growth in domestic markets.

The likes of Arla and FrieslandCampina have also invested in Asian dairy groups.

Separately on Monday, New Zealand-based Fonterra, the world's top milk exporter, highlighted its plans for growth in China's dairy market, which is growing by 16% a year, and expected to reach $86.3bn in 2014.

While growth is expected to slow a little later in the decade, the market will have expanded to $140.2bn nonetheless by 2019, Fonterra said, quoting Euromonitor estimates.

Chinese ambitions

Fonterra is expanding in China both through in-country production and though exports, with China this year expected to take 31% of Fonterra's New Zealand milk output, up from 19% last year.

Fonterra collects and processes the vast majority of New Zealand milk production.

The co-operative, which expects to product 110m litres of milk in China this year, from 12,000 cows, sees these figures rising to 1.0m litres and 100,000 cows in 2020.


 

AgriMoney