French dairy giant Danone is to merge its Russian fresh dairy business with local firm Unimilk.

Danone said the deal would create a business that generated annual sales of EUR1.5bn and spanned Russia, Ukraine, Kazakhstan and Belarus.

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The Activia maker cited the “complementary geographical presence” between the two companies, pointing to its presence in western Russia and Unimilk’s “higher profile in the east”.

Danone chairman and CEO Franck Riboud added: “Almost 20 years after taking our first steps in Russia, Danone-Unimilk represents a strategic move for Danone in a region which is offering a promise of growth in the years ahead, and where we will be pursuing ambitious goals for the future.”

Unimilk, which will hold 42.5% of the new entity, said the deal with Danone had benefits for the wide dairy sector in Russia.

“Since its very beginning Unimilk was established as a company open for partnership, ready for implementation of any bold ideas and projects aimed at our consumers’ satisfaction,” Unimilk CEO Andrey Beskhmelnitsky, who will be chairman of the new venture, said.

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“Our alliance with Danone, the world leader in fresh dairy products, will increase [the] investment potential of the whole industry, set new standards of efficiency, increase demand for high quality raw milk, and will obviously promote consumer market and the development of our teams.”

Danone, who will hold 57.5% of the venture, has an option to buy out Unimilk in 2022.

Filip Kegels, general manager of Danone Fresh Dairy Products in Eastern Europe and Central Asia, will take charge of the operational management of the venture.

 

The deal is subject to gaining regulatory approval in the countries concerned and is expected to close towards the end of the year.