PARIS (dpa-AFX) - French dairy giant Danone SA (DANOY) is mulling the sale of its 20 percent stake in Japanese dairy-drink producer Yakult Honsha Co. for about $2 billion, according to a Bloomberg report on Wednesday. Danone is the biggest shareholder of Yakult Honsha.
The report indicated that Danone has held internal discussions about a possible stake sale. The deliberations are at an early stage and no final decision has been made.
The move comes at a time when Yakult shares have gained 26 percent to record-high levels this year. The proposed stake sale will also end Danone's more than ten year old business alliance with Yakult, which is best known for its popular probiotic and fermented milk drinks.
Danone, the world's largest yogurt-maker, had signed a 10-year strategic business alliance deal in March 2004 that saw Yakult and Danone jointly developing and marketing so-called fermented probiotics drinks.
The deal was signed after Danone raised its initial 5 percent stake in Yakult, acquired in 2000, to 20 percent in April 2003. The terms of the deal prevented Danone from acquiring a controlling stake in Yakult for the ten year duration.
However, the deal was terminated a year earlier in April 2013 after relationship between the two companies soured as Danone repeatedly pushed for boosting stake in the company. They then replaced the deal with a smaller level collaboration deal.
Danone is looking to raise cash to fund acquisitions through the stake sale as it looks to shore up its sagging profits by focusing outside Europe. Danone is said to have already discussed possible targets, including U.S.-based baby-food maker Mead Johnson Nutrition Co. (MJN).
Meanwhile, media reports in July indicated that Danone was also in talks to sell its own medical-nutrition business to U.S. pharmaceutical and medication delivery company Hospira, Inc. (HSP) in a cash and stock deal that could value the unit at nearly $5 billion.
Some other suitors for the business included Swiss food giant Nestle SA (NSRGY), German healthcare group Fresenius SE and several buyout firms.
In Wednesday's regular trading session, DANOY is currently trading at $13.96, down $0.07 or 0.50% on a volume of 16,639 shares.
In Paris, Danone is currently trading at 55.84 euros, down 0.29 euros or 0.52%.
Copyright RTT News/dpa-AFX