Danone and Arcor advance dairy joint venture in Argentina

Danone and Argentine group Arcor have defined the corporate terms, exchange ratios, and valuations to consolidate their dairy businesses in Argentina. The integration will operate through La Serenísima Unida S.A. (LSU), a vehicle formed by Arcor and Compagnie Gervais Danone to manage dairy products, yogurts, and desserts.

Independent discounted cash flow valuations set a conservative floor for Mastellone Hermanos shares at 417.8 million dollars, equivalent to 620,413 million Argentine pesos. The valuation horizon was extended from three to five years to account for a recent consumption contraction and temporary margin pressure in Argentina.

Under the agreed structure, Compagnie Gervais Danone contributed 30 million dollars in cash, raising LSU's capital from 30 million to 44,580 million Argentine pesos. Danone then transferred 17,537,214,505 shares of Danone Argentina, representing 59.99% of its capital and voting rights, valued at 54,564,370 dollars or 81,028.1 million Argentine pesos, while retaining a direct 39.99% stake.

The second stage involves a spin-off and merger absorbing Mastellone shares held by Arcor and Bagley Argentina. LSU will issue 620,413,545,647 ordinary shares of 1 Argentine peso nominal value, bringing its total capital to 746,021.6 million Argentine pesos. Mastellone shares will convert at an exchange ratio of 1.5952395744 LSU shares per Mastellone share.