French food-products company Danone has agreed to invest $417 million in two deals with China Mengniu Dairy Co., China's biggest dairy producer, Bloomberg reported.
Danone will have an initial indirect interest of about 4 percent in Mengniu, according to the article. The Paris-based company will also set up a joint venture with Mengniu for yogurt products sold in China.
According to Reuters, the deals could be seen as an attempt by Mengniu, which has suffered through two scandals related to tainted milk, to restore trust in its brand.
"Mengniu can, through a foreign partner, bring in new technology and technical know-how on the way to producing much safer dairy products to ease consumers' concerns over the quality of locally made products, while Danone can open its door to access the vast China market," Andrew To, director of research at Hong Kong-based Emperor Capital Group, told Reuters.
“Following the successful international cooperation with one of the largest European dairy companies Arla Foods, Mengniu is very pleased to pa rtner with the world’s leading Fresh Dairy company Danone, introducing its international expertise in product research and development, brand management and sales and marketing, which will strengthen our technical innovation capacity in the Fresh Dairy Pr oduct market and help us to deliver products of wider range and higher quality to consumers,” said Mengniu CEO Elaine Sun in a company press release.