Monday, March 10, 2008

Wahaha vetoes Danone's new cooperation plan

Chinese beverage giant Wahaha Group is in difficult talks with French food group Danone SA on a new cooperation plan, said board chairman Zong Qinghou.

Zong disclosed that Danone proposed the two companies merge all their businesses, including Wahaha's ventures and non-ventures to incorporate a new company, in which Danone and Wahaha will hold an equal 40% stake, and sell the remaining 20% in an initial public offering (IPO) on the A-share market.

Danone required its stake should be guaranteed to be valued at RMB 50 billion (US$6.9 billion) if it is lower than 40%, said Zong, "the conditions are unreasonable. We cannot possibly accept them."

Danone, the world's largest yogurt maker and bottler of Evian water, said earlier Wahaha has set up so many non-ventures to compete with its joint ventures, and bid to offer RMB 4 billion to buy 51% stake in the Chinese company's non-ventures. Wahaha rejected this proposal.

Since last May, the two companies have filed numerous complaints and lawsuits against each other under various Chinese and foreign jurisdictions. Talks to resolve the joint venture dispute were extended for a third month, according to Zong.

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