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Indonesian conglomerate laps up Danone Dairy

Indofood CBP sees good demand for milk beverages such as Danone’s Milkuat.

JAKARTA -- Indofood CBP Sukses Makmur, Indonesia's largest producer of instant noodles, has announced plans to buy up entirely Danone Dairy Indonesia, a local unit of French company Danone.

     Indofood CBP is seeking to strengthen its dairy business to meet growing domestic demand, the company said in a stock exchange filing on Friday. Indofood CBP is a subsidiary of Indofood Sukses Makmur, the core unit of Indonesian conglomerate Salim Group.

     Indofood CBP's dairy subsidiary Indolakto will acquire the shares and trademark of the Milkuat milk beverage, a Danone Dairy Indonesia core product, from Danone subsidiaries Danone Dairy Investments Indonesia and Danone Asia for 250 billion rupiah ($20 million). The transaction is due for completion by year's end.

     Indofood CBP has been expanding its beverage business in recent years to spur growth outside instant noodles. In 2012, it teamed up with Japan's Asahi Group Holdings to establish a non-alcoholic beverage joint venture.

     Food and beverage giant Danone generated 6% of its 2013 revenue from Indonesia, the company's fifth largest market. But sales and profit for the first half of 2014 dropped partly as a result of the rupiah's decline against the dollar. The company has also been facing competition from rivals, including New Zealand's Fonterra, which is building its first manufacturing plant in Indonesia.

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