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Danone has this morning announced it plans to transfer control of its dairy and plant-based business in Russia, in a move that could cost the group €1bn.
Danone will exit its essential dairy and plant-based (EDP) business in Russia, which make up the vast majority of its business in the country.
Danone said it considers that this is the best option “to ensure long-term local business continuity, for its employees, consumers and partners”.
Over the first 9 months of 2022, the EDP Russia business represented around 5% of Danone net sales and had a dilutive contribution to Danone’s like-for-like sales growth and recurring operating margin.
The transaction could result in a write-off of up to €1bn.
Danone will retain its specialized nutrition business, which includes infant formula, in the country.
“Danone’s priority remains to act responsibly and respectfully to its local employees, consumers, and partners throughout the process,” it said.
Morning update
Elsewhere, Diageo has announced it intends to take a larger stake in Kenyan drinks group East African Breweries.
Through its wholly-owned indirect subsidiary, Diageo, it has announced its intention to increase its equity stake in EABL up to 65% by means of a partial tender offer made to other shareholders.
Diageo Kenya currently holds 50.03% of the issued share capital of EABL.
Diageo Kenya does not intend to make a takeover offer for EABL and will apply to the Capital Markets Authority in Kenya for an exemption from complying with the requirement to make a takeover offer.
Also in M&A, soft drink giant Refresco Group has entered into an agreement to acquire Tru Blu Beverages, one of Australia’s leading manufacturers of non-alcoholic beverages.
The acquisition of Tru Blu Beverages will expand Refresco’s addressable market and provides opportunities to leverage Refresco’s size and scale, as well as its track record of successfully integrating companies, the group said.
“Tru Blu Beverages fits right into Refresco’s business model, with its wide range of beverage solutions for retailer brands and global, national and emerging brands.”
“In addition, Refresco’s strategic ESG agenda will enable Tru Blu Beverages to accelerate its efforts of minimizing the environmental impact of manufacturing processes, packaging and transport.”
Refresco will obtain a national Australian market position by acquiring Tru Blu Beverages, which will underpin opportunities to drive continued growth in the region, both organically and through acquisitions.
The group said it intends to continue expanding its global footprint to better serve existing and new customers through a range of formats and channels and will “continue to make selective investments and acquisitions, targeting value accretive opportunities”.
CEO Refresco, Hans Roelofs, commented: “Today’s announcement is a testament to our proven Buy & Build strategy. We started with one factory in Europe just over two decades ago and steadily built a diversified, pan-European platform. Only six years ago, we took our first step into North America. We now operate over 70 manufacturing sites globally, with just about half of those located across North America and the rest throughout Europe, offering a full range of beverage solutions to a broad customer base.
“The acquisition of Tru Blu Beverages in Australia creates a new platform for Refresco, in line with our strategic promise to expand into a third continent. The three strategically located manufacturing sites are the starting point for our future footprint in the region. Acquiring Tru Blu Beverages further strengthens our position as beverage solutions provider to branded customers and leading retailers globally, and provides new opportunities for further growth.”
CEO Tru Blu Beverages, Peter Brooks, added: “By joining Refresco, our customers, suppliers and employees will be able to benefit from the Company’s broad capabilities, experience and expertise. We are proud to become part of the Refresco family, with its strong entrepreneurial spirit and passion to deliver quality service to its customers. Tru Blu Beverages’ leading capabilities and blue-chip customer base gives Refresco a solid entrance into the Australian market. We look forward to building an even stronger platform together.”
On the markets this morning, the FTSE 100 has opened up 1% to 6,918.3pts.
Risers include Glanbia, up 5.9% to €11.89, Ocado, up 2.2% to 445.5p and Cranswick, up 2.2% to 2,688p.
Fallers include Science in Sport, down 6.3% to 15p, Parsley Box, down 2.6% to 9.25p and Marston’s, down 1.2% to 35.2p.
Yesterday in the City
The FTSE 100 ended six days of consecutive losses to climb 0.4% to 6,850.2pts yesterday.
Ocado was a major riser, climbing 10.9% to 435.8p as news emerged its key US retail partner Kroger is in talks to consolidate its market position.
Ocado UK retail partner Marks & Spencer was also up 5.6% to 98.4p on the positive sentiment.
Other risers included THG, up 11.4% to 38.2p, Naked Wines, up 5% to 79.3p, Domino’s Pizza Group, up 4.8% to 225.6p, FeverTree, up 4.5% to 940.5p, Hilton Food Group, up 3.8% to 623p, Pets at Home, up 3.6% to 273.8p and Greggs, up 3.5% to 1,813p.
Fallers include Virgin Wines, down 3.9% to 50p, Bakkavor, down 3.6% to 91p, Reckitt Benckiser, down 2.5% to 5,760p, Unilever, down 2.4% to 3,838p, Hotel Chocolat, down 2.4% to 123p and Diageo, down 2.2% to 3,615.5p.
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