Unimilk-Danone project could get up to $600 mln investment - Zubkov
ST. PETERSBURG. June 19 (Interfax) - Investment in the project by Danone and Unimilk to merge their FSU dairy assets could reach $500 million-$600 million, Russian First Deputy Prime Minister Viktor Zubkov told the Vesti 24 TV news channel.
"This is a very big project, and investment could be $500 million-$600 million," Zubkov said.
Danione's corporate communications manager in Russia, Pavel Isayev, told Interfax that the French dairy group intended to invest "around half a billion dollars" in the project in the next five years.
Danone and Unimilk signed an agreement to merge their dairy business in Russia and other CIS countries on June 18.
The merger applies to operations in Russia, Ukraine, Kazakhstan and Belarus and involves all the dairy products they produce, Danone said in a press release.
Danone-Unimilk will have a 21% share of the Russian market, with total revenue of approximately 1.5 billion euro and more than 18,000 employees.
Danone will control 57.5% of the new entity, and Unimilk shareholders will have 42.5%. The deal will be transacted principally through a contribution of assets supplemented with a cash payment by Danone. The merger will increase Danone's debt by 1.3 billion euro, primarily reflecting the cost of put options that will be provided to Unimilk shareholders, the press release says.
"These options will allow them to dispose of part or all of their shares in the new entity, Danone being able to hold 100% of these shares in 2022. The operation will be accretive to Danone earnings per share starting in 2011," it says.
The new entity "will be chaired by Andrey Beskhmelnitsky, current CEO of Unimilk, while Filip Kegels, current General Manager of Danone Fresh Dairy Products in Eastern Europe and Central Asia, will take charge of operational management."
The new entity will not lead to a monopolization of the dairy products market, First Deputy Prime Minister Zubkov said on June 18. "We believe that this is a normal development. There are many other major, medium and small companies, there is a competitive environment," Zubov told journalists.
"Danone can extend its experience on European and global markets to the market in Russia and the CIS," he said.
"What happened today is a very important event in the life of the agricultural industry in Russia and the CIS countries, because creation of a such a major company instills confidence that it will be a modern company with good investments, with modern production," he said. The company will have an 18%-20% share of the Russian market, he said.