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October 1, 2009

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Danone, Wahaha split

French food and beverage giant Groupe Danone SA has pulled out of its 13-year joint venture with China's Wahaha Group Co, ending a bitter three-year dispute.

In a joint statement issued yesterday, Danone said it intends to sell its 51-percent stake in the venture to Wahaha, China's biggest beverage maker. The sale will end all legal proceedings related to disputes between the two parties.

Since 2007, Paris-based Danone, Wahaha and its founder Zong Qinghou have been embroiled in at least 25 lawsuits and arbitration proceedings in five countries. Before the agreement was announced, Danone had lost several trademark-related suits.

Danone, which owns stakes in 39 Danone-Wahaha joint ventures, accused Zong of setting up separate companies that manufactured products under the Wahaha brand, claiming it violated the partnership contracts.

Wahaha, in turn, claimed Danone harmed its interests by allowing some of its high-profile executives to take positions in competing firms in China.

"The settlement is amicable for both parties because the long-running disputes were costly and sapped the energy of both companies," said Liu Jinhu, an analyst from Landsea Securities Co. "It may take some time for Danone to rebuild a strong presence in China. But it won't be a huge problem due to its strong international management experience."

Both companies declined to give financial details of the settlement.

Danone's 2008 revenue in China totaled 500 million euros (US$733 million).


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