Danone to sell potential US$2 billion stake in China Mengniu

PARIS: French food group Danone, under pressure from investment funds over its shareholder returns, on Wednesday said it is selling a potential US$2 billion stake in China Mengniu Dairy Company.

The Chinese company has a market capitalisation of about 166 billion Hong Kong dollars (US$21.4 billion), meaning a sale of Danone's 9.8per cent stake could reap US$2.1 billion based on latest market prices.

The French company, the brands of which include Actimel yoghurt and Evian water, added that the sale would take place via an accelerated bookbuilding process.

Danone shares were up 0.8per cent in afternoon trading.

Former Danone boss Emmanuel Faber was ousted as chairman and CEO this year after clashes with some board members over strategy and calls from activist funds for him to resign over the group's lacklustre returns compared with some rivals.

French paper Les Echos this week reported that Antoine de Saint-Affrique was the frontrunner to become Danone's new CEO. Danone declined to comment on that report.

Last October Danone also agreed to sell its stake in Japanese probiotic yoghurt maker Yakult Honsha.

(US$1 = 7.7660 Hong Kong dollars)

(Reporting by Sudip Kar-Gupta; Editing by Carmel Crimmins and David Goodman)