Danone Said to Sell Baby Formula Unit over Fears of Tighter Regulation

(Beijing) – The French dairy giant Danone SA sold the China unit of its baby formula brand to cut its exposure to regulatory risks, an analyst says.

The formula maker Yashili International Holdings Ltd. said in a statement with its major shareholder, China Mengniu Dairy Co., on December 2, that it agreed to pay Danone HK$ 1.23 billion for Dumex China.

Danone said in July that it would sell the Dumex China unit to Yashili and use the proceeds to buy shares in Mengniu. However, Mengniu, the country's biggest dairy producer, said in the latest statement that the plan had fallen through. It did not say why.