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Danone severs ties with Wahaha

FRENCH food and beverage giant Groupe Danone SA today ended a three-year dispute with China's Hangzhou Wahaha Group Co by pulling out of their joint ventures after nearly 10 years.

In a joint statement today, Danone said it intend to sell its 51 percent stake in the ventures with Wahaha to its Chinese counterpart.

The completion of this settlement will put an end to all legal proceedings related to disputes between the two parties.

Since 2007, the Paris-based Danone has become embroiled in at least 25 lawsuits and arbitration cases in five countries against Wahaha and its founder, Zong Qinghou.

Danone, which owns stakes in 39 Danone-Wahaha joint ventures, accused Zong of setting up separate companies and illegally producing Wahaha-branded products, in violation of partnership contracts.

Wahaha, the nation's biggest beverage maker, also claimed that Danone harmed its interests as some of its high-profile executives took position in competitive firms in China.

"The settlement is amicable for both parties as the long-running disputes consumed huge cost and energy for both companies," said Liu Jinhu, an analyst from Landsea Securities Co Ltd.

"It may take some time for Danone to rebuild a strong presence in China," he said. "But it won't be a huge problem due to its strong international management experience."

Both companies declined to offer financial details and the settlement is still subject to the approval of the Chinese authorities, Danone added.


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