33 / 364
Overview of activities, risk factors
2.7 Risk factors
DANONE
REGISTRATION DOCUMENT 2015
33
Risks associated with external growth
RISK IDENTIFICATION
RISK MONITORING AND MANAGEMENT
Acquisition of companies
Danone's strategy consists in holding leading positions in
each of the markets in which it operates. Given the context of
continued concentration in the food and beverage industry, this
strategy involves the pursuit of growth opportunities through
joint-ventures or acquisitions, as was the case with the Unimilk
transaction in Russia and in other countries with YoCream
(Fresh Dairy Products, United States), Wockhardt (Early Life
Nutrition and Medical Nutrition, India), Centrale Danone (Fresh
Dairy Products, Morocco), etc.
Given the competitive landscape in particular, Danone may not
be able to carry out transactions under consideration for its
development or external growth, which could have a significant
adverse impact on the implementation of its strategy.
In addition, acquisitions may have an adverse effect on the
Company's results and activities if the Company does not
successfully integrate the acquired companies, provide the
necessary resources and/or achieve all of the expected syner-
gies and cost savings.
Finally, during the integration phase, acquisitions may gene-
rate risks associated with the historical entities and practices,
which, in the case of major acquisitions, could adversely affect
Danone's activities, results and reputation.
For each acquisition, Danone prepares an integration program
and provides the resources necessary for its implementation.
The 2010 acquisition of the Unimilk group's companies, for
example, (the companies now known as Danone Russia, Danone
Ukraine, Danone Belarus and Danone Kazakhstan) had been
subject to an integration plan and had since been integrated
into Danone's internal control system.
Partnerships
The relationships with Danone's partners in certain entities
are governed by contracts or documents that may provide for
certain decisions to be made either with the agreement of the
partners or without the agreement of Danone. Such restrictions
could make it difficult to carry out Danone's strategy in these
entities, which could have an adverse effect on Danone's acti-
vities. More generally, other difficulties could be encountered
with joint-venture partners, notably differences over strategy,
development or operational management of these joint-ventures
and could adversely affect Danone's activities and results. In
addition, some agreements signed with partners may include
call or put options on the stake held by Danone or the partner,
which, if they are exercised, could have a significant impact
on Danone's activities.
Danone carefully reviews the drafting of shareholders' agree-
ments and ensures the implementation and maintenance of
adequate governance with its partners. Regarding call and put
options, their implementation is linked to Danone's acquisition
strategy and in case they are exercised they are monitored in
order to anticipate the operational or financial impacts and for
options which can be exercised by Danone, to decide whether
they should be exercised or not.