France's Danone has announced an agreement to merge its operations in Russia and other countries of the former Soviet Union with a large Russian dairy, Unimilk.

Danone says the merger with Unimilk will become the largest producer of dairy goods in the former Soviet Union, with annual sales reaching EUR1.5 billion (US$1.8 billion).

The company said in a statement Friday (Jun 18) it would own 57.5% of the merged company, with Unimilk owning the remaining 42.5%. Financial details were not disclosed.

The French yogurt and bottled water producer says the two companies' synergy is ideal since Danone has a strong market presence in the European part of Russia while Unimilk has a better profile further east.

The deal was announced on the sidelines of a major business forum in St. Petersburg.